Budget 2024 aims to boost social spending while tracking tax evaders

By Sanath Nanayakkare

The budget proposals presented by President and Finance Minister Ranil Wickremesinghe in parliament yesterday for the Financial Year 2024 contained a lot of emphasis on social spending while being mindful of closing loopholes in the tax system where many ‘taxable individuals and institutions’ are still evading taxes.

Thus the submission of a Tax Identification Number (TIN) will become mandatory for actions such as opening a bank current account, obtaining approval for a building plan or registering motor vehicles in line with the budget proposals.

Further, a withholding tax on gem and jewellery transactions, an income tax on Unit Trusts and Unit Holders and prosecution action against failures to file tax returns are on the cards.

The Finance Minister before starting to read out the budget proposals for the financially-troubled nation acknowledged the fact that not only the 1.3 million strong public servants but also millions of others making a living in the informal sector were in deep economic misery. He said that the tax base needs to be increased to support the vulnerable groups without resorting to money printing or further borrowings. Having said so, he proposed that the state employees’ cost of living allowance be increased by Rs. 10,000 from January, 2024.

He proposed that it would be added to the monthly salary from the month of April 2024 and the balance accumulated from January to March 2024 would be paid in installments within a 6 month period, starting from October 2024. He also mentioned that the monthly cost of living allowance of public pensioners would be increased by Rs. 2,500.

“The distress loan facility given to state employees which is in suspension now would be restored from January 01, 2024. Rs. 205 billion would be allocated for benefit programmes targeting disabled individuals, CKDU patients, and senior citizens. Estate workers will get freehold land. Rs. 10 billion would be allocated to facilitate the development of abandoned estates and lands and Rs. 600 million will be allocated to the ‘Bim Saviya’ programme. We will completely stop collecting rent from the low-income families living in houses constructed by the Urban Development Authority. The full ownership of these houses will be given to those families,” he said.

However, the Finance Minister stressed on the need to meet a state revenue target of Rs. 3,415 billion for the Year 2024 to implement the above proposals and many other social spending proposals he made. He said that the tax base needs to be broadened and tax administration would be streamlined in 2024 to raise government revenue.”

Reproduced below are some highlights from the budget speech.

Rs. 50 billion to be allocated to assist SMEs through a loan scheme introduced by the Asian Development Bank

Four new universities to be established soon

Rs. 2 billion to be allocated for repairing of old bridges

A 25-member committee to be appointed to recommend reforms for the education system

Allocations for state universities for required enhancements

SLIIT, Horizon Campus, Royal Institute and NSBM to be elevated to universities

‘Suraksha’ student insurance to be reintroduced

Rs. 100-million allocation to boost medical tourism

Rs. 2,500 million for the development of Fisheries and Agriculture

Rs. 2000 million for resettlements in the North and East

Rupees 2 billion for development of rural roads

Rs. 55 billion to resume infrastructure projects halted due to economic crisis

Rs.1.5 billion allocation to develop provincial and school cricket

Recommencement of Central Expressway construction work

Establishing new investment zones in Hambantota, Jaffna, Trincomalee, Bingiriya and Kandy

Rs. 3 billion for establishing a national center for Artificial Intelligence

Measures to create a green economy in Sri Lanka to shift to a faster growth trajectory