National Chamber calls for measures to manage impact of one-off revenue proposals in Budget 2022

National Chamber of Commerce of Sri Lanka (NCCSL)in a statement yesterday recognized the efforts of the government to signal all the stakeholders that they are in a path towards managing fiscal space by estimating budget deficit for 2022 in single digit (8.8 percent) compared to estimated double digit (11.1 percent) during 2021.

However, NCCSL took note that such fiscal space creation was intended through one off revenue proposals such as Surcharge Tax of 25 percenton persons and companies with taxable income over Rs. 2 billion for the year of assessment 2020/21 and increase in VAT on financial services by 3 percentfor 2022 and the introduction of Social Security Contribution at 2.5 percent on turnover and theimplementation of Special Goods and Services Tax, etc.

The chamber welcomed the government’s efforts taken to enhance the social safety net which is of paramount importance to sustain the livelihood of lowest income earners of the country through expenditure proposals such as rural development projects, Vari Saubhagya, Development of local government divisions, rural livelihood development, water for all, home shops, home economy,  modernization of plantation sector, development of schools, development for rural houses, relief for the micro, small and medium scale entrepreneurs, etc.

NCCSL is hopeful that careful regulatory and policy measures would be introduced to manage the impact of one off revenue proposals preventing spillover effects to the national economy which may restrict lending capacity of financial institutions and ability to expand the capacity of large business entities. 

“We emphasize on the importance of careful administration and meaningful allocation of significant expenditure proposals which are expected to improve living conditions of lower income earners and improving SMEs of the country which has attracted with special emphasize under National Chamber Vision,” the statement said.

“We observe foreign currency scarcity, tangible efforts to improve export orientation and attraction of much needed FDI could have been addressed better in the Budget proposals.

Further, we expect efficient monitoring and disbursement of budgetary allocations wouldhelp to improve the GDP growth of the countryin the medium term allowing the Government to divert the attention to addressing significant challenges such as debt refinancing, enhancing availability of foreign currency and loosening import restrictions, etc gradually,” it added.