Tax on export crops likely in Budget 2023
Under serious discussion for inclusion in the upcoming 2023 budget is a proposal to enforce a tax on three main export crops – tea, coconut and rubber hitherto exempted from tax, officials said.
Meanwhile the Finance Ministry is weighing the pros and cons of new revenue proposals at present aimed at including higher taxes and more direct taxes amidst wider reforms of state-owned enterprises (SOEs) in the Budget 2023 in line with commitments made to the International Monetary Fund (IMF).
The Ministry will kick start budgetary meetings for consultations on budget proposals and financial allocations with top ministry officials and stakeholders soon.
President Ranil Wickremesinghe, also Finance Minister, has issued relevant directions to officials of the National Budget Department to accord priority in introducing safety nets to the vulnerable communities including the poor and the low income middle class hit by the economic crisis.
Some of the tax increases have already been introduced with effect from April and or with immediate effect in accordance with Interim Budget 2023 which will also be extended in the 2023 budget, officials said.
Budget estimates for 2023 are based on Zero-Based Budgeting system and the proposed new taxes are not expected to impact overall business sentiment on a macro level, although certain industries will be affected, one official disclosed.
As per the Appropriation Bill for 2023, the total expenditure estimated for 2023 is Rs. 7.8 trillion as against Rs. 6.1 trillion for 2022. Recurrent Expenditure has been estimated at Rs. 4.6 trillion, while total Capital Expenditure is Rs. 3.24 trillion. The gross borrowing requirement is estimated at Rs. 4.43 trillion.
Revenue is projected to trend around Rs.2.77 trillion in 2023 compared, to estimated targeted revenue Rs.2.27 trillion in 2022, according to Finance Ministry econometric models and estimates.
Indirect tax proposals will be the extension of the removal of various tax holidays granted under the Inland Revenue (Amendment) Act No.10 of 2021, imposition of income tax on dividend payment by a resident company to a non-resident person, and removal of additional 100 per cent deduction applicable for 2022/23 tax year granted for marketing and communication expenses
Revenue proposals in budget 2023 would increase government revenue
to 11.3 percent from 9 per cent in 2022 and expenditure to 18.1 per cent from 18.9 per cent.
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