‘Social welfare benefits will not be curtailed’

By Surekha GALAGODA

The Government will not curtail social welfare benefits such as the fertiliser subsidy and Samurdhi given to the people said Director General Fiscal Policy, Ministry of Finance and Planning S.R. Attygala.

Following increased economic activities this year the revenue up to July is well on target. The January to July cumulative revenue figure recorded a 25 percent increase compared to last year.

The projected budget deficit can be maintained at a two percent reduction from last year. Expenditure is the main issue. But the Government will maintain public investment between 6.5 - 7 percent of GDP. From the recurrent expenditure, a large portion is spent on interest payments but it is hoped that it will be reduced with the reduction in interest rates. Therefore, this will be a huge saving.

In addition, the money spent on IDPs also reduces as they are being resettled. All these measures will help the Government to reduce the expenditure and maintain the projected budget deficit. Attygala said that the corporate and payee tax structure will be revised to make it more people friendly. The Government also has a plan to rationalise the BOI tax system to create a level playing field between BOI companies and non BOI companies. The Government is also planning to reduce the taxes affecting the banking sector. At present the banking sector has to pay around 70 percent as taxes.

The number of taxes and the amounts will be reduced to ensure that banks have more funds to plough back to the economy. The main aim of the Government is to reduce the number of taxes and reduce the amounts too so that it will benefit everybody. This move will also increase compliance. At present people tend to evade paying taxes which results in the Government losing revenue. He said that some people feel that when taxes are reduced it would affect Government revenue but with the Government’s decision to reduce certain import duties from June it resulted in an increase in revenue.

Attygalla said that duty reduction on cars will continue and there is no move to increase it again.

There are many exemptions at present for each and every tax and these are being misused by people and the officials for their benefit. There will be a simple tax system in future with reduced rates and a limited number of exemptions and this would help increase the tax base and compliance.