CNCI optimistic over govt’s ability to meet revenue targets in 2024

Challenging the Fitch rating stance that Sri Lanka would not be able to achieve the revenue targets spelt out at the 2024 budget the Ceylon National Chamber of Industries (CNCI) says that these can be met as the authorities aim to raise revenue in 2024 by deploying several new tools.

Fitch believes there are significant risks to the government’s revenue goal for 2024. Sri Lanka has a record of fiscal slippage and revenue collection fell 29% short of target over 9M23.

In a post budget press conference Deputy Chairman-CNCI, Pradeep Kahawalage, said that the increase of the VAT from 15% to 18% will contribute to the revenue collection in a big way.

“in addition, getting more eligible people to pay tax by widening the tax net will also help to increase government revenue.”

He said that new tax payers would be roped in as it will be made compulsory to have a Taxpayer Identification Number (TIN) whenever a person open bank current account at any bank; obtain approval for a building plan; register a motor vehicle or renew license and register a land or title to a land, by the buyer.

“These measures will help non tax payers to open more tax files resulting in gaining more tax revenue. The PAYE tax too has not been reduced which will help the government to gain more tax revenue. The government hopes to achieve around revenue of Rs. 4,127 billion and 93% of it would be from tax which is achievable.”

He said that though some may think otherwise this tax revenue will help the country to stabilize ensuring that no economic crisis takes place again.

“Many SME industries were shut down due to the C-19 pandemic and Economic crisis and as they are burdened with huge debt steps should be taken to assist them, “ said Chairman CNCI Kevin Edwards. “Obtaining a loan from the Asian Development bank to assist the SME sector was a good move but more clarity is needed on the implementation of this.

He also requested a relook at the high electricity traffic for the industrial sector which is driving away the competitiveness of the local products in the export market. “Today unit of electricity in Sri Lanka is around Rs. 40 while in India it’s Rs. 30 and in both Vietnam and Thailand it’s around Rs. 20.”

Edwards also requested authorities to add more infrastructure to the Railways enabling more goods transport in them which will be cheaper and would save fuel as well.

He said that while venturing into FTA’s with countries Sri Lanka should look at strengthening anti-dumping laws. The Chairman also lamented that though CNCI gave 18 budget proposals none of them has been considered.

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