Not an election budget
Corporate leader were not averse to this year’s budget saying that it is good, given the dire circumstances that the country is embroiled with, and the challenges before the nation.
Reiterating the government's aim to tighten the tax administration to enhance tax collection, President Ranil Wickremesinghe delivering the budget speech on Monday highlighted agriculture modernisation, fisheries, dairy, tourism, and export-led manufacturing as priority development areas.
From the perspective of the tax on the face of the budget, there are no major changes in relation to the tax regime apart from the proposals in relation to VAT. It refers to the removal of almost all of the VAT exemptions other than health, education and some essential food items but at the same time sources from the Finance Ministry have indicated the list of exemptions around 50 listed in the VAT Bill published on August 31 will be retained though the exemption applicable on petrol, diesel, LPG, chemical fertiliser will be removed
"Though contrary to the Budget pronouncement, the supply of electricity including the distribution will be exempt from VAT as per information available from the personnel at the Ministry of Finance,” Suresh R.I. Perera, Principal Tax at KPMG said.
The requirement to submit the certificate of Tax Payer Identification (TIN) at the point of registration of vehicles and renewal of licenses, registration of land, obtaining approval for building plans, and opening a bank current account is a significant proposal, he said.
A notable omission in the budget speech is the usual tax revenue break up and absence of any new taxes being introduced including the casino industry, Mr. Perera added.
"The budget clearly says that it will be challenging to reduce individual taxes affecting the top 20 per cent of the population in the context of the IMF Programme. The key is due adherence and implementation, in which we usually fail,” a manufacturing company CEO said.
The government must raise taxes on all business and public as there's no more Central Bank support for the budget, an economist said.
A digital ID for every citizen was mooted by Prajeeth Balasubramaniam, Chairperson Council for Start-ups who said that it will be easier to collect taxes with such an implementation. "They talk about digitisation. A good place to start with would be having a digital ID for every citizen. It'll be easier to collect taxes as well. It would result in transparency and good governance. There is a long term gain for all."
He also noted that it will be ideal if the government can meet the budgeted revenue next year. "We have not done so for the last 23 years. They should also look at a mechanism to equitise the debt given the fact that the interest cost are currently at unmanageable levels. It’s draining the country further."