Budget 2023, a mere policy statement sans action plan - Eran
Overshadowed by excessive and untimely taxation measures, a leading Opposition lawmaker said Budget 2023 had been turned to a policy statement with no realistic and credible action plan.
“Budget is not a mere policy statement, it should consist of clear targets and an action plan to achieve them within the year. However, we didn’t see that in this budget,” Opposition lawmaker and a former State Minister of Finance, Eran Wickramaratne said during the debate on Budget 2023 in parliament last week.
While moving towards an export-oriented competitive economy is a central theme of this budget with an annual increase of US$ 3 billion in export income for the next decade, Wickramaratne pointed out that the government failed to come up with a clear programme to grow exports.
“There were no incentives given to boost exports. When you look at our peers, our exporters will be taxed at one of the highest rates. In Bangladesh, exporters are taxed at 12 percent while no taxes are imposed on exporters for first three years in Vietnam. We also have to look at Africa now. Exporters are not subjected to taxes in Ethiopia and Kenya for the first 10 years. In contrast, exporters will be subjected to 30 percent tax in Sri Lanka,” he elaborated.
Wickramaratne remarked that the timing of the proposed increase on corporate income taxes on sectors such as exports, SMES, manufacturing, tourism, ago-processing and construction do not auger well given the current state of the economy.
“There’s no debate that we need to raise taxes, however, the question is when and by how much? This is why I’m saying this budget is missing a credible programme and an action plan.
There’s no programme to increase value-added exports and to attract more FDIS. The budget is filled with many ideas, but with no credible action plan,” he stressed. While welcoming the move to strengthen the social safety net in protecting the poor, Wickramaratne warned that the middle class could be pushed into poor category if the government pursues to cut current tax-free threshold of Rs.3 million to Rs.1.2 million on personal income taxes.
“As the food inflation is running at 100 percent, the real value of incomes has also cut in half. If we are to cut the tax-free income threshold by half under these circumstances, we would be pushing the financially-independent middle class to into poverty by forcing them to demand relief from the government. Therefore, we are asking the government to maintain the tax-free threshold at Rs. 2.4 million. We need to protect the poor, but we shouldn’t push the middle class into poverty,” he said. Commenting on the proposal to appoint a Presidential Commission on Taxation, Wickramaratne suggested that the government should setup a permanent commission for the consistency in tax policies as the public confidence on presidential commissions has waned.