“Sri Lanka now on right path of economic stabilization”
By properly recognizing past mistakes and lessons learnt, Sri Lanka is now committed to carrying out structural reforms, including the program of the International Monetary Fund, asserted State Minister of Finance Shehan Semasinghe.
“The local tax system too is becoming stronger due to the revenue-based fiscal reform program,” he noted.
He pointed out that it is important to collect public revenues through taxation to achieve the Sustainable Development Goals by 2030, as research has proven that the tax rate is related to the Sustainable Development Goals and the achievement of the Sustainable Development Goals in emerging economies. He said that tax revenue will play a very important role, but the relationship between taxation and the Sustainable Development Goals is not easy to understand, so it is important to better understand the concept by the policy makers and tax administrators.
Participating in a session organized by the New York Economic and Social Council on “Sustainable Development Goals and Taxation, Lessons Learned and Best Practices” , the State Minister mentioned that Sri Lanka can overcome the current challenges and the success achieved so far will not be reversed. “We have made significant investments to improve education, health, social security and basic needs. Sri Lanka has records in literacy, education levels, and low maternal and infant mortality due to our free health and education policies. Significant progress has been made in electricity and drinking water supply. All these welfare facilities need to be funded.”
It is clear that the main source for this is taxation. Sri Lanka is currently facing an unprecedented economic crisis. We are currently managing this challenge with the support of the international community, including creditors, the IMF, the World Bank and other development partners. With the IMF’s approval of the Extended Fund Facility Program last month, as a result, the economy is recovering. Fiscal imbalances over a considerable period of time have affected the current severe economic conditions of the country. Low government revenue and high recurrent expenditure have led to budget deficits for several decades.
“This has led to an increase in public debt which has reached unsustainable levels. In addition, it is clear that the tax cuts in late 2019 contributed to further loss of revenue.”