Budget numbers “nonsensical”: Eran

Wednesday, 18 November 2020 00:18 -     - {{hitsCtrl.values.hits}}

  • Says Govt. unlikely to raise revenue by about 40% 
  • Wants more clarity on goods and services tax, definition of non-strategic SOEs 
  • Slams PM for encouraging tax evaders to invest in SL, warns it will undermine law and order  

By Darshana Abayasingha

Eran Wickremaratne 

SJB Parliamentarian Eran Wickremaratne yesterday described the Government’s Budget as containing “nonsensical” revenue measures and proposals that were too inward looking and protectionist to lay the

groundwork for sustainable growth. 

The MP, addressing a post-Budget forum hosted by think tank Verite Research, added he had waited patiently in Parliament to hear the planned revenue measures of the Government but did not see any such constructive proposals in the Budget. 

“Normally when you go for a Budget speech you are waiting for the revenue measures, and it never came,” Wickremaratne said, pointing out that Government projects taxes from external trade will go up from Rs. 400 billion to Rs. 530 billion, pointing out that these taxes come from imports, which have been restricted. “So how is it actually going to increase?” he asked. “These numbers are just nonsense.” 

“Then you have Goods and Services Taxes (GST), it is supposed to go up from Rs. 631 billion to Rs. 823 billion, but we all know that VAT has come down from 15% to 8%. So maybe this GST, which was not properly spelt out, is going to bring this huge increase in revenue,” Wickremaratne added. 

The MP said the Government estimates revenue as a whole to be Rs. 1,588 billion in 2020, and this figure to increase to Rs. 2,029 billion in 2021. “I don’t think it’s even going to be Rs. 1,200 billion. Just there it’s going to be a shortfall of Rs. 300 billion. The Government is now looking at a revenue jump of about 40%. That’s a huge jump in revenue, when over the last 20 years it’s been averaging 4% – 10%, and in one exceptional year it jumped 20% in 2015 when we had some exceptional taxes.” 

“This is just ridiculous, these numbers,” Wickremaratne remarked. 

However, he welcomed all the changes the Government suggested on the administration system of taxes and tax efficiency. Yet, whilst tax concessions were spoken of there was very little on increasing taxes which does not augur well on enhancing revenue, he said. 

“When I look at tax from equity point of view, those concessions have been given to crony capitalists. I was shocked to see the Finance Minster who is also the Prime Minister saying in a Budget speech that there are people who have hidden money both locally and internationally, and therefore they could make a declaration and at a reduced tax they will be attracting them. 

“That’s not a very good signal, and something of that nature being said from the highest ranking public official in the country. By doing this you are encouraging people to work outside the legal system. Then what will our response be when people break the law? The wrong signals may go to the market given all the work done by the Central Bank over the past few years,” Wickremaratne lamented. 

He also said there was an interesting line in the budget saying the Government will be flexible in looking at non-strategic State-Owned Enterprises. “So you have to read into it,” he said. “The tone of the Budget was very inward looking, looking at our markets. 

“I’m reading into it you can dispose of the non-strategic State-Owned Enterprises, which I would welcome if that’s what is meant. It would be very interesting to note what they would say about SriLankan Airlines. No one has said anything about it. I would like to know if it is a strategic enterprise or non-strategic.”


An unrealistic Budget: Harsha