Budget 2015 not one-off but reflects consistency: DST

Tuesday, 28 October 2014 01:59 - - {{hitsCtrl.values.hits}}

E&Y says Budget 2015 is inclusive and investment promoting

A senior Treasury official yesterday dismissed the notion that Budget 2015 was a one-off but insisted it reflected consistency of pragmatic and prudent policies pursued since 2005.

“It (Budget2015) is not a standalone or a one-off budget but a continuity of consistent pragmatic and prudent policies pursued since 2005,” Deputy Secretary to the Treasury S.R. Attygalle told the Ernst & Young’s post-Budget forum. Recalling some of the measures announced and implemented since 2005, Attygalle said the 2015 Budget focuses on sustaining the goals achieved during the past decade and taking socio-economic growth to the next level in the country. Deputising to Chief Guest Finance Secretary Dr. P.B. Jayasundera who was indisposed, Attygalle said that Budget 2015 placed greater emphasis on knowledge economy in order to steer the country to 2020 goals of reaching $ 150 billion economy from the present level of $ 77 billion (estimated for 2014). “The focus on knowledge economy and skills development is key for Sri Lanka to graduate to an upper middle income (with a per capita income of $ 7,500 from the current $ 3,700) country by 2020,” the Deputy Secretary to the Treasury said. “The Government via 2015 Budget has addressed various issues towards achieving such a goal,” he added.

To reinforce the observation that 2015 Budget reflected consistency, Attygalle said that despite a challenging environment, the Government was persistent with the lower taxation introduced in 2011. “We are consolidating in 2015 without changing the direction undertaken a few years ago,” he added. Ernst & Young Sri Lanka Managing Partner Asit Talwatte described the 2015 Budget as “inclusive and investment promoting”. He explained it was inclusive given the broad and varied subjects and issues covered and investment promoting given the incentives offered. At the forum E&Y Head of Tax Services Duminda Hulangamuwa dealt with several of the key proposals in 2015 Budget. He said that the reduction in employment income tax rate (PAYE) from 24% to 16% was significant as it will enhance discretionary spending in the hands of those employed. “This reduction places tax on employment income in Sri Lanka the lowest with Singapore’s tax being 20% and 26% in Malaysia,” Hulangamuwa said. With regard to corporate tax rate of 28% he said Sri Lanka remains competitive whilst the 12% concessionary rate has been extended to sugar manufacturers as well as pioneering industries though the latter required more clarity.

He welcomed measures to recover tax and EPF dues in default (a proposal via which Government has earmarked Rs. 40 billion in revenue) though he had some reservations over the refinance facility to provide 5-year credit at 6 percent interest from all banks for payment of tax arrears since it meant giving a loan to someone who didn’t have cash or capacity to pay. Hulangamuwa also commended the proposal to simplify the tax structure with regard to motor vehicle imports as well as on tobacco and liquor though greater clarity will be welcome. He also listed the reduction of 1% in VAT and expansion of VAT to cover a wider retail trade as key proposals apart from giving certainty to investments undertaken but projects not completed by extending the time limit under Section 17 A. In summing up Hulangamuwa quoted a saying “tax is the price we pay for the country we want.” Commissioner General of Inland Revenue Wasanthi Manchanayake spoke on the new Revenue Administration and Management Information System (RAMIS).