No new taxes in 2024 budget, confirms Siyambalapitiya

• Says focus will be on expanding the tax base and ensuring tax compliance to bridge revenue gap
• Says President Wickremesinghe has also recognised people cannot be further burdened by new taxes
• However, Wickremesinghe in September said 2024 budget will contain a proposal to tax primary bond dealers
• IMF estimates indicate potential 15% revenue target deficit for Sri Lanka by year-end

Sri Lanka will not be looking to impose new taxes on people in the upcoming budget to boost  government revenue

to meet the International Monetary Fund (IMF) targets, State Finance Minister Ranjith Siyambalapitiya said.
Instead, he stated that the government would continue in its endeavours to expand the tax base and compel tax evaders to contribute, thereby closing the revenue gap.

“Clearly the government revenue needs to be increased to reach the revenue targets. For that we cannot impose new taxes on people. It is not a political issue. The President has also clearly said this.
So, what we can do is to expand the tax base within the existing tax framework and ensure that tax evaders fulfill their obligations,” Siyambalapitiya said.
However, President Wickremesinghe making a speech in parliament in September said the 2024 budget will contain unexpected elements, including a proposal to tax primary bond dealers.

As Sri Lanka fell short of the revenue targets set by the IMF, the Fund has delayed the disbursement of the US$ 340 million second tranche of the US$ 3 billion Extended Fund Facility (EFF).
IMF estimates suggest that Sri Lanka is likely to fall behind in achieving the revenue targets outlined in the programme by 15 percent by the end of this year. 

According to the programme targets, Sri Lanka needs to raise government revenue equivalent to 12 percent of GDP by 2024.
The IMF staff mission that was here last month for the first review of the EFF said their discussions with Sri Lankan authorities mainly centred around revenue mobilisation and noted that a lot more can be done continuing on the reform path and bolstering the country’s tax administration.

“We are really looking forward to the benefits of tax reforms that were introduced last year to bear fruit. They should be supplemented by other appropriate revenue enhancing measures to make sure that Sri Lanka avoids a revenue shortfall next year,” IMF Senior Mission Chief for Sri Lanka Peter Breuer told a press conference held on September 27 to mark the conclusion of the first review.

The Central Bank, which slashed policy rates by another 100 basis points at the beginning of this month said, it expects a temporary spike in inflation as a result of the cost-reflective energy and utility prices and revenue mobilisation measures the government may introduce in the upcoming months to boost its revenue to meet the IMF targets.

Sri Lanka’s official headline inflation was recorded at 1.3 percent in September, significantly easing from almost 70 percent exactly a year ago.
Central Bank’s Economic Research Department believes the disinflation process that continued for last several months is expected to turnaround from the third quarter and stabilise around 5 percent target level over the medium term, which is the official inflation target of the Central Bank.

Meanwhile, Minister Siyambalapitiya said there is no need to make predictions about the upcoming budget as the government has made increased allocations for health and welfare of people.
As per the Appropriation Bill for 2024 recently presented to parliament, defense, health, transport, and public administration ministries have received the largest allocations.
The reading of the budget proposals for 2024 is scheduled to take place on November 13.