Verité Research unveils 10 budget proposals for revenue and growth
Ahead of the presentation of the budget for 2024 to parliament today (13 November), Verité Research has unveiled 10 budget proposals designed to enhance revenue and revitalise growth in Sri Lanka.
The proposals were announced at a forum titled ‘Budgeting for Revenue and Growth’ hosted by the think tank on Thursday (9), which facilitated a conversation on the pathway to revive Sri Lanka’s economy.
The forum featured presentations by Professor Mick Moore from the Institute of Development Studies UK, Professor Shanta Devarajan from Georgetown University, Professor Udara Peiris from Oberlin College and Verité Research’s Executive Director Dr. Nishan de Mel, Research Director Subhashini Abeysinghe and many others. (Pictured)
Nishan de Mel underscored the importance of reducing interest costs while increasing revenue for sustainable economic recovery.
He noted that the interest cost for 2024 projected in the upcoming budget was LKR 234 billion higher than what was envisaged in the current IMF agreed economic recovery plan. He showed that Sri Lanka will continue to have the highest ratio in the world of interest cost to government revenue: currently above 70% and remaining above 60% based on the projected 2024 budget.
Proposals aimed at increasing revenue are:
1. Increase the withholding tax rates from the existing 5% to 10%. – the proposal is expected to yield an additional LKR 90 billion. 2. Adopt the published rational formula for indexing cigarette taxes – the proposal is expected to add over LKR 35 billion. 3. Reverse sugar tax reduction and remove executive discretion on tax changes – the level of discretion allowed through the Special Commodity Levy Act, to the minister, led to what is commonly referred to as the ‘sugar scam’, immediately rectifying it (as had just taken place) can add over 25 billion. 4. Recover excess costs of Ceylon Petroleum Corporation through an increased tax on the whole industry rather than an increased price, above the internationally indexed formula, by the entity – the proposal will generate about LKR 25 billion in extra taxes collected from competing producers. 5. Implement the described method to estimate and collect property taxes – the proposal will initially increase tax collection by at least LKR 17 billion.
The segment on revitalising the economy was followed by a panel discussion that featured Nishan de Mel, Subhashini Abeysinghe, Professor Shanta Devarajan, Professor Udara Peiris and Country Managing Partner at Ernst and Young Sri Lanka Duminda Hulangamuwa.
The panel emphasized the need for Sri Lanka to diversify its export sectors, reduce barriers to international trade, and seize economic opportunities in tourism, IT, ports and shipping infrastructure. The discussion also touched on the importance of addressing inefficiencies in tax collection and institutional processes.
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