Economists say no handouts from the budget

Dr. Indrajith Coomaraswamy, Former Director Economic Affairs at the Commonwealth Secretariat said, “In 2010 the government set out to rationalize the tax structure. This was broadly done that this year." He said that it's encouraging to see that they have not granted handouts. "They maintained fiscal discipline. Otherwise rating agencies will downgrade us.”

Dr. Saman Kelegama, Executive Director Institute of Policy Studies told the Business Times that he's quite happy to see that three recommendations by the Presidential Taxation Commission of 2010 (where he was a member) have been implemented.

“It is proposed to extend the 2 per cent NBT applicable to the banking sector to all banks and financial institutions to provide equal treatment to the banking and non-banking sectors and to expand the tax base. This was one of our recommendations,” he said.

He added that the proposal to fix the tax-tree threshold applicable for VAT on supermarket scale retail trade at Rs. 250 million per quarter will bring more people into the tax net.

In order to prevent manipulations on the computation of turnover through exempted items a limit of 25 per cent of the total turnover as exempted value from VAT in relation to such business.

The export tax on cinnamon according to industry analysts has no clarity as there’s an issue with the percentage. “Whether it’s six per cent as many say is not clear as yet,” an industry analyst said.

The Inland Revenue Department (IRD) is being computerized to make tax administration efficient and tax payment simple, which is also a recommendation by the Presidential Taxation Commission was proposed at this year's budget, Dr. Kelegama said. "A new Revenue Administration Management Information System (RAMIS) is being introduced to automate the processes of IRD and eventually link the IRD with Sri Lanka Customs, Department of the Registrar of Companies, Department of Motor Traffic, the Land Commissioner General's Department and the Ministry of Finance and Planning. The new system will enable the use of a Personal Identification Number to coordinate all transactions and will also to facilitate online tax payments, etc.”