|
|
|
  |
| Sunday, 21 November 2004 |
 |
|
 |
Business |  |
| News Business Features Editorial
|
No 'Robin Hood' budget this! by Gamini Warushamana Dissappointing its most vehement critics, the UPFA government on last Wednesday presented its maiden budget widening the tax-base instead of introducing Robin Hood-style budget that taxing rich and granting concessions to poor as predicted by the opposition and some media. Though the VAT have been increased on luxury items and concessions are granted to essential items government has not passed a tax burden on the business community. Just before the finish the presentation of the budget at the Parliament by Finance Minister Dr. Sarath Amunugama, the main architect of the budget, Treasury Secretary Dr. P.B. Jayasundara appeared and explained the macro economic vision of the budget at the Seminar organised by Ernst & Young at the BMICH in the evening. Addressing the business community, Dr. Jayasundara said after following closed economic model for over 25 years and again another 25 years fully open economic policies country has not achieved gains. Open economy grown, but not showing desired results. Other democratic open economies in the region are growing 7, 8, 9 percent annually but we are hardly achieving 5% growth. Pointing out the need for increase in government revenue and the policy behind the new tax system, Dr. Jayasundara said, the country cannot grow without developing the infrastructure unfortunately he said. We still do not have the essential infrastructure in place. We can't achieve a growth of more than five percent without addressing this issue. Government is responsible for the development of infrastructure but needs revenue. The revenue which was 24% of GDP had reduced between 15% -16% in the recent past. In the year 2003 government received the lowest revenue. In 2004 as a result of steps taken to increase revenue it achieved a slight increase. Previous government attempted to address the problem but made mistakes and reversed the good things that was achieved. The debit tax introduced is very complicated. Correcting the mistakes are difficult because the numbers are large. One of the commendable steps the previous government had taken was widening the tax net. Explaining the difficulties that government faced in increasing its revenue, Dr. Jayasundara said that, Country needs revenue of over 20% of GDP. In the early years 5% of the government revenue came from export taxes. In export promotion we have to give up these export taxes. Today the country has entered into Free Trade Agreements with several countries. Therefore import duty cannot be increased. On the other hand to promote investment government has granted various tax holidays to investors under the BOI but this has also created another problem. "This is a hard revenue budget" he said. Explaining the government's desire to get the participation of the business community and professionals in making tax decisions, he said the government obtained the inputs of 17 clusters of National Council For Economic Development (NCED) in the preparation of the budget and government policies. A new tax cluster in the NECD will be set up in the next week and all the tax proposals in the budget will be discussed in the cluster. In the future any new tax will not be brought without consultation of the tax cluster which will consist of experts in the field. The budget has proposed to replace the 15% single VAT rate by 5% , 18% and 15% on essential commodities, luxury and other items respectively. Explaining the introduction of this new tax rates Dr. Jayasundara said, single tax rate is easy for administration as well as dealing with the IMF. When we propose single GST rate it was not a problem with National Security Levy (NSL) because NSL was a significant part. Without NSL a single VAT rate is difficult. Dr. Jayasundara assured that the government is pro private sector, but we are not only looking at the blue chips. He emphasised the need for diversifying the economy. The growth should not be service-sector based but it should be diversified to include agriculture and industry. Dr. Jayasundara said that to increase the government revenue, institutional changes in the Inland Revenue Department are going on. The department will be modernised and new technology; training of the staff, replacing the pre 1977 procedures will be taking place. He assured the people that this year's budget deficit would not exceed 8.5 percent. People have bad perception on the economy. But nobody know the exact numbers and numbers are old. Government reduced the deficit by managing the recurrent expenditure and increasing revenue. **** A very fair Budget The National Chamber of Commerce Sri Lanka (NCCSL) as one of the main chambers, expressed their views on the Budget. Speaking at the Press briefing President, Asoka de Z Gunasekara said "the maiden Budget of the UPFA can be called as very fair as the government has given thought to every aspect and sector before presenting the budget, be it the government or private sector." He said,the Budget was presented in a stressed economy. The NCCSL also made several proposals and as proposed the government has considered our proposals when preparing the Budget. Explaining the Budget proposals Chairman-Financial Services Committee- NCCSL- Nihal Fonseka said that the NCCSL had the opportunity prior to the Budget to make submission to the government based on expectations expressed by members belonging to the various sectors and theses submissions followed discussions with policy makers. (CM) |
|
| News | Business | Features
| Editorial | Security
| Produced by Lake House |
