SL has lowest revenue collection in the world-Verite Research
All annual budgets in Sri Lanka are the same and a replay of the same problems every year, lacking credibility. Government revenue is the lowest in the entire world, said Ms. Subhashni Abeysinghe, Research Director – Verite Research at a webinar held last Tuesday on the topic “Tomorrow’s Budget Today” arranged by the Economic Student’s Association of the University of Colombo.
Ms. Abeysinghe said that every year the government has not been able to reach estimated revenue collection. “We have a history of missing revenue targets. We have implemented wrong policies in respect of revenue collection and tax reforms that led to loss of revenue. The governments’ and the public have always been optimistic about budgets following a change of government. Many believe that it will solve problems by setting up targets but not realistic enough to achieve them,” she said.
The Ministry of Finance has been excessively over-estimating government revenue every year and nobody has taken measures to correct them. The Sri Lankan government sets the most optimistic targets based on a political exercise. What happens when revenue targets are not met is that it compels to cut down expenditure. Large deficits occur as a result when expenditure is high. Fifteen per cent of the GDP is needed to meet the current expenditure of paying salaries and pensions etc. “We have been borrowing money to feed the people right along and over the years we have not been able to meet current expenditure. In Sri Lanka we do not have scenarios with a back-up plan to manage when revenue expenditure fails. Inaccurate assessment of our debt becomes a problem when devising a plan to borrow money internationally at a low interest level,” she said.
Prof. W.D. Lakshman, Emeritus Professor of Economics, University Colombo and former Governor of the Central Bank, said that he sees the 2022 budget as a run-of-the-mill one with no grandiose plans for the next five years. Except for the 1971 and 1978 budgets all other budgets look alike trying to identify budget issues of the year. Some of the proposals in the budget will please the back-benchers in the parliament. The proposals in the budget is vague in respect of poverty alleviation and growth in the country. Despite the prevailing revenue crisis, the budget fails to clearly articulate a long term plan to increase revenue up to a 20 per cent mark, he said.
Senior Prof. Jeevika Weerahewa of the Faculty of Agriculture of the University of Peradeniya said agriculture productivity is fairly low compared to industry in the country. Agriculture provides some foreign revenue to the country. But the declining agricultural sector contribution to the GDP is falling. Less and less people are engaged in agriculture today. Agriculture helps to foster the food security situation and foster poverty alleviation. Small scale farmers live under poverty conditions but contribute to the country’s economy. Constraints hamper the agriculture sector and solutions provided to overcome them are not satisfactory. Agriculture earnings in terms of foreign exchange is higher than its inputs imported to the country. There were several proposals of modernising the agricultural sector and giving relief to organic agriculture practices and compensation paid to farmers when they lose productivity. Budget proposals include high tech agriculture paths green agricultural development of non-toxic weedicides, providing working capital and proposals to promote plantation sector and aqua culture. Monies allocated to these projects have gone into organic producing plants.
Retired Prof. Sumanasiri Liyanage of the Department of Economics and Statisics of the University of Peradeniya also spoke.
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