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Interim budget revenue proposals key for meeting this year’s deficit target

16 September 2015 05:09 am - 0     - {{hitsCtrl.values.hits}}

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By Chandeepa Wettasinghe
The budget deficit numbers outlined in January’s interim budget will be met if the new parliament will pass the revenue measures which were proposed in January, the country’s top Finance Ministry official said.

“Since the revenue legislation was not passed, we will put it to the parliament again soon. If that revenue comes, all will be well,” Treasury Secretary Dr. R. H. S. Samaratunga told Mirror Business.

The new government presenting an interim budget this January said it was targeting a budget deficit of 4.4 percent of GDP (Rs.499 billion) for this year, slightly lower than the previous government’s 4.6 percent (Rs.521 billion) target. 

To achieve this, the government introduced several new revenue means by way of taxes on high-income individuals and corporations as well as some reduction in capital and current expenditures.  

The revenue measures were thought to be unusual and oppressive as they were one-off or retrospective taxes. Controversy surrounded the taxes too, as they were thought to be politically-motivated.

When Finance Minister Ravi Karunanayake was queried last week over interim revenue measures, he had refused to go into details, only saying that the proposals would be forwarded to parliament within 2 weeks.

Speculation is rife that the new regime is contemplating the introduction of a wealth tax in the upcoming budget in November, in lieu of the revenue measures proposed in the interim budget in January. 

Meanwhile, in the run up to the election, Karunanayake had said that revenue targets were healthy despite the setbacks, amid the Excise Department revenue increasing 300 percent and Customs Department revenue increasing 50 percent compared to last year.

However, despite the revenue measures, the interim budget revenue projection fell to Rs.1.62 trillion from Rs.1.69 trillion in the national budget in November 2014, and expenditure fell to Rs.2.12 trillion from Rs.2.21 trillion.

In its 5-point plan, government has promised expenditure in setting up of infrastructure for 45 economic development mega zones, 11 industry and technology development mega zones, 2 tourism development mega zones, 23 agricultural development mega zones, 10 fisheries development mega zones and 2,500 cluster villages, for which revenue has to be found.



Productive public sector
Finance Minister Ravi Karunanayake said that the public sector would be made more productive than the private sector in the foreseeable future.
“We need to make management in public enterprises better than the private sector and we will show that in the near future,” he said.

He claimed that no state-owned enterprise would be privatized.

“Privatization is a banned word in this government,” he said.

Following the January regime change, he had also said that any public enterprise running at a loss after 2 years would be closed down.
The state-owned power and water utilities companies which have monopolies had been running at extreme losses for the past few years, though the power sector gained some breathing space due to the fall in oil prices.

The existence of monopolies does not promote a consumer friendly nation, which President Maithripala Sirisena placed great importance on recently.
Karunanayake had said during the Sri Lanka Economic Summit last month that monopolies would be broken.
 
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