Ceylon Chamber stresses on timely implementation of budget proposals

• Says Budget 2023 is in right direction as it contains many laudable reform proposals
• But says it falls short in outlining specific measures to curtail discretionary recurrent expenditure and provide greater accountability for government spending

The Ceylon Chamber of Commerce (CCC) yesterday said the Budget 2023 contains many laudable reform proposals which, if implemented in a timely manner, will complement the on-going fiscal reforms outlined prior to the budget. 

“It is refreshing to see that the direction of the budget is towards reforms as compared to unsustainable relief measures seen in past budgets. However, the budget for 2023 falls short in outlining specific and concrete measures to curtail discretionary recurrent expenditure and provide greater accountability for government spending, which the Chamber has highlighted in its recent statement in response to the proposed tax hikes,” CCC said in a statement. 

It also pointed out that the reduction in allocation towards discretionary expenditure could have also facilitated a greater allocation towards social protection programmes. The lack of implementation of budget proposals in successive national budgets has reduced the credibility of the national budget process and limited the reform process only to the speech. The implementation of Budget 2023 with set timelines and goals will provide credibility to the budget process as well as the success of reforms. 

“We hope the proposed Presidential Task Force established to monitor the implementation of budget proposals will be proactive in sharing updates on a timely basis with the public providing accountability and transparency,” the chamber noted.

Meanwhile, CCC welcomed the proposal to establish several new economic zones to attract foreign investment and suggests that infrastructure development and management of these zones to be entrusted to the private sector under a PPP framework.  It also added that the leasing out of unutilised and unproductive land belonging to JEDB, SLSPC and LRC to grow exportable crops is also a positive move to release more land for economic activities that can boost forex inflows. 

The chamber also welcomed the significant focus on tax administration in line with its pre-budget proposals such as the appointment of a Tax Ombudsman and introducing a charter covering rights and obligations of tax payers. 

“We feel the output from the proposed Presidential Taxation Commission as recommended by the chamber will assist in avoiding ad-hoc changes in taxation as seen in the last few years. Proposals on rationalising the tariff structure including the phasing out of para tariffs will also be key in driving trade and investment,” it noted. 

CCC also lauded the reiteration of the commitment made in the interim budget to introduce a new, updated and unified labour law balancing the interests of both employers and employees. It further welcomed the proposals to establish an unemployment insurance scheme and a health insurance scheme for private sector employees through the Employees’ Trust Fund.  It also said the reintroduction of paying wards in government hospitals is also a step in the right direction.

“The proposed growth of 64 percent in government revenue will require economic activity to rebound and compliment the improvement in tax administration and higher tax rates. As such, proposals with a view of enabling growth to reach a sustainable path and improving capital formation would have been desirable in the budget. 
We hope that many of the reforms outlined in the budget will move forward the discussions with the IMF and creditors as well as driving economic growth and development trajectory of the country,” the statement said.