Budget 2022 in catch 22 scenario, seen achieving 5-8 % growth rate

Sri Lanka’s Budget 2022 is facing a daunting task of gradually increasing growth rates of 5-8 percent commencing from 2022 while providing relief for the needy, and at the same time introducing possible reform options.

These included policy and regulatory changes, digitisation, fiscal adjustments and factor productivity enhancing other change management restructures, reliable official sources said on Thursday.

A strong social safety-net, with flexibility and rapid action capability, will be developed in the budget to be presented by Finance Minister Basil Rajapaksa tomorrow (Friday).

The market-driven macroeconomic policy will be the way forward, with a focus on agro-industrial exports and services growth while attracting foreign direct investments within a facilitative foreign policy framework.

A pricing policy based on import cost and other relevant cost variables is to be proposed to maintain fuel, energy and public transportation prices at affordable level.

All existing tax holidays and tax concessions will be continued but the grant of new tax holidays and exemptions are to be limited.

A proposal has been made to introduce progressive taxes on both income (including capital gains) and wealth with VAT rate increases being phased out; reductions in threshold and reduction in exemptions.

The possibility of the setting up of an Independent Revenue Enforcement Authority was also discussed at budgetary meetings, the sources revealed.

Micro Small and Medium scale Enterprises (MSMEs) are to be provided with more concessions while business turnarounds and management restructures generating employment and cash flows will be getting more benefits.  

The Ceylon Motor Traders Association is keeping high hopes of getting some relief from the budget as they are suffering from vehicle import restrictions almost two years up to now, former chairman of Ceylon Motor Traders Association (CMTA) Gihan Pilapitiya said.

The association has made several proposals to the Treasury and they expect a positive response as the country is losing massive tax revenue, he added.     

He stated that it is time for the government to allow reasonable numbers of vehicle imports and the interim method proposed by the government of allowing those with foreign currency to be allowed to import vehicles is a timely idea.

The Vehicle Importers Association of Sri Lanka (VIASL) has also submitted their proposals to develop the industry, increase the state revenue and to provide an opportunity to the community to purchase a quality vehicle at a reasonable price. (Bandula)