By Chandeepa Wettasinghe
Ministries not adhering to the zero-based budgeting concept will receive no funding in future budgets, Finance Minister Ravi Karunanayake said at a budget seminar organized by the Chartered Management Accountants yesterday.
“If they do not fulfil the requirements as per what they want, funding will not be allocated. Our government is not willing to spend tax payers money for somebody’s frolics,” he said.
However, enforcing such funding cuts will be delayed up to at least 2018, as Karunanayake admitted that the zero-based budgeting concept was not implemented in the 2016 Budget. However, during the Budget reading, he had painted a different picture.
“In fact, with this budget 2016, we have brought into focus the concept of zero budgeting under which the spending agencies will have to justify each and every item in their respective budget before requesting for allocations,” he had said in parliament last week.
In a turn of events yesterday, he said that it was too premature to implement zero-based budgeting during the 2016 budget, and that departments and ministries will be asked to send in all their expenditure measures by May 2016 to be included in the 2017 budget.
This would mean that any funding cuts for ministries can only be implemented in 2018, once their 2017 Budget performances are reviewed for the 2018 Budget. However, Karunanayake assured that a large amount of wastage has been curtailed with the 2016 budget.
“What has gone on the past will stop in 2016. We’re a professional team. This budget was not a mythical voyage of discoveries like it was in the past,” he said. He noted that all revenue targets will be met while all expenditure allocated will be spent as proposed in the budget.
However, Murphy’s Law says that anything that can go wrong, will go wrong.Gajma & Co. Senior Partner N. R. Gahendran opined that the new regime will have to sacrifice capital expenditure if the budget deficit widens as it had inevitably happened in the past. Meanwhile, Karunanayake said that Sri Lanka has now become one of the countries with the lowest corporate and individual taxes in the world, and that heavy penal taxes will be charged if entities fail to pay on time.
“We’re now one of the countries with the lowest tax rates. Ireland has a 12.5 percent corporate tax, but many other additions push the tax levels up to 17.5 percent. So if you can’t pay taxes here, that means you can’t do business anywhere else in the world,” he said.
The 2016 Budget had reduced general corporate taxes to 15 percent and personal taxes to 16 percent. The global corporate tax average is 23.5 percent while the individual tax average is 31.2 percent.