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Strong fiscal policy framework in place



TREASURY SECRETARY: Dr. P. B. Jayasundera. Picture by Sumanachandra Ariyawansa

FISCAL POLICY: The Government is now in the process of formulating a strong fiscal policy framework to convert the revenue account into a surplus as against the country’s day-to-day expenses, within the next three to four years, Treasury-Secretary, Dr. P. B. Jayasundera said.

“Our revenue account in the budget during the last 30 years was above day-to-day expenses. It has been the legacy or salient characteristic for some time,” Dr. Jayasundera said at a taxation seminar organised by the Sri Lanka Institute of Taxation.

Dr. Jayasundera making the keynote address said to face this challenge it is necessary for the country to reach sustainable revenue growth and create an investor-friendly environment in the country. Up to 1990, the country was able to manage revenue as equivalent to the country’s GDP enabling Sri Lanka’s per capita income to reach US$ 400.

From 1990 to 2004 despite all difficulties our country became a middle-income category country by reaching the per capita income of US $ 1500, he said.

The Treasury Secretary also said the Government is now planning to achieve a 19 per cent revenue growth in the next one to two years in relation to the GDP.

To achieve it, the country has to move in the proper direction to increase revenue that comes from taxation, he said. Dr. Jayasundera said the country’s revenue account could be increased by conceptualising strategies by reducing recurrent cost, building a human resource capacity in organisations and adopting appropriate legislation.

He said that salaries paid to public servants, interest for past debt taken from other lending agencies and subsidiary payment are three areas that should be evaluated properly to streamline tax collection in the country to streamline revenue collection.

“The country has to remove unhealthy and useless subsidy payments to strengthen the revenue level in the country. Over the last few years flour subsidy was removed after 50 years and also the petroleum subsidy also removed to a greater extent to improve taxation,” he said.

He further said the public service should be given reasonable remuneration.

Areas like education, health cannot be stopped from subsidy, while Sri Lanka Customs, Department of Exercise have to be strengthened to cover loopholes and deficiencies when collecting revenue to the country, he said.

Further, the Inland Revenue Department should also be strengthened and modernised to address taxation issues in the country, he said.

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