SLEA President Prof. A.D.V de S. Indraratne is seen addressing the forum(R). Pricewaterhouse Coopers Taxation Service Director (SL) Charmaine Tillerkeratne (centre) and Dr. Anura Ekanayake are seen at the head table.
Pic by Pradeep Pathirana
By Lahiru Pothmulla
While claiming that the budget-2016 as a whole is a very fine one, Sri Lanka Economic Association (SLEA) President Professor A.D.V de S. Indraratne said its proposals for next year were incompatible with the third generation economic policies introduced by Prime Minister Ranil Wickremesinghe in parliament recently.
Addressing a public seminar organised by the SLEA at the Colombo University’s Economic Department under the theme ‘Budget 2016: Economic Impact’, the professor said, through the budget, the tax system would be regressive and the ratio of direct and indirect taxes would increase in contrast to Prime Minister’s policy statement.
“The budget, as a whole is a very fine one. It has covered each and every aspect. In fact, it had increased the amount allocated for education. However, some of the proposals do not match with the Prime Minister’s policy statements such as regressive tax system,” he said.
He said both current revenue and current expenditure have increased though current expenditure relatively less resulting in a current surplus of 0.8 percent.
“But overall deficit still remains very high at almost the same level as last year’s (5.9 percent) due to substantial increase in estimated public investment. Both foreign and domestic borrowings have increased to finance increased public investment, raising concerns about ‘living beyond means’,” he stressed.
The professor said no adequate measures to increase the domestic resources and thereby reducing the savings investment gap with increased current revenue and reducing debt burden.
Meanwhile, Colombo University’s Professor of Economics Sirimal Abeyratne said the budget for the next year at glance seems to be in a right direction after experiencing bad fiscal plans for many years.
“This budget focuses market orientation, trade liberalization, moving to a tax low regime, simplification and rationalization of taxes, improving transparency and promoting investment as well as business. It looks to be in the right direction,” he said.
He said out of context, the budget proposals were progressive but in context, the current state of economy doesn’t permit the proposals with little attempt for fiscal consolidation. He said the budget expenditure for next year had been significantly increased to Rs. 2787 billion and added Sri Lanka was one of the most indebted countries.
Dr. Anura Ekanayake, the past Chairman of the Ceylon Chamber of Commerce said the notable change in the budget is that it had taken a turn in the approach towards the development. “Earlier approach was infrastructure development and now it’s based on human capital, which is the right thing to do,” he said.