SL tax authorities at a loss to enforce revenue proposals
Sri Lanka’s tax authorities are at a loss to enforce revenue proposals in the former administration’s 2015 budget and the revised 2015 budget presented by the current regime as many of the finance bills relating to these proposals have not been enacted in parliament.
The expected revenue by implementing at least 25 revenue proposals in the 2015 budget has not been raised during the past seven months and it has created cash flows problems for the government, tax consultant N.R. Gajendran said.
Finance Ministry officials said the country’s revenue collection has been hampered due to the overlapping and overriding of proposals in the budget presented in October 2014 and the January 2015 revised version. ”For example VAT was increased to 12 per cent in the budget presented in October 2014 while the January 2015 revised budget reduced it to 11 percent with both budgets passed by parliament and enforceable,” a senior official said.
Lack of clarity in some proposals and the delay in issuing guidelines by the Treasury has also hindered revenue collection, he said.
The revised budget 2015 contains 10 new levies including Mansion tax and motor vehicle importers levy, Super Gain Tax, Bars & Tavern Levy, Migrating Tax, Casino Levy, Mobile Telephone Operators Levy, and Direct to Home Satellite Services Levy, Dedicated Sports Channel Levy, as well as Satellite Location Levy. The government had planned to raise Rs.80.3 billion by implementing 25 revenue proposals including those 10 levies. But all those were at a standstill as relevant finance bills were not presented in parliament soon after passing the budget.
Mr. Gajendran told the Business Times that the new government which will be elected following August 17 general election should enact finance bills relating to previous regimes budget 2015 and revised 2015 budget.
Until then it has to raise money to maintain cash flows from issuing bonds or local bank borrowings, he said, stressing the need to achieve macroeconomic stabilisation and for prompt action to re-activate budget proposals as soon as the election is over.
This would also mean that this would impact the year end revenue targets as well. Except the revenue proposals which have been brought under gazette notifications, all other revenue proposals have to be passed in parliament in the same fiscal year. Otherwise they become invalidated, he said. Minister of Finance Ravi Karunanayke told a media conference recently that the minority government has been held hostage by a majority Opposition blocking revenue avenues in parliament during the past six months.
He noted that the wrong economic policies by the previous government embedded with corruption and frauds resulted in the continuous deterioration of the government revenue and the agro based economy as well.