Over Rs 900 bn in uncollected taxes worries govt.

Budget 2024: Govt. counts on MR to deliver required votes

By Shamindra Ferdinando

State Finance Minister Ranjith Siyambalapitiya yesterday (21) warned that President Ranil Wickremesinghe’s economic recovery plans would be derailed and the country would again plunge into crisis if the Opposition succeeded in defeating the 2024 Budget.

The Kegalle District MP asserted that even the resumption of the IMF’s USD 2.9 bn bailout package and ongoing talks on foreign and local debt restructuring could be jeopardized in the event of the government’s failure to muster the required support in the vote on the Second Reading of the Budget later in the day.

The Minister said so in response to The Island query whether the ruling SLPP decided to vote for the Budget against the backdrop of MP Namal Rajapaksa publicly criticizing the 2024 revenue proposals. The issue was raised at a media briefing held at the President’s Media Division (PMD).

A smiling State Minister declared that SLPP leader Mahinda Rajapaksa had assured support for the Budget. The declaration was made a few hours before the vote on the Budget. The State Minister said that anyone genuinely interested in carrying forward economic recovery plan initiated by President Wickremesinghe wouldn’t dare vote against the Budget. Those who pursued personal agendas would go all out to undermine the government, the State Minister said.

During his introductory remarks, the State Minister emphasized that the country was in such a precarious state, the government had no option but to expand the tax regime in line with its overall strategy to address the developing financial crisis.

According to the State Minister, at the time of the crisis, the revenue had been 8.3 % of the Gross Domestic Product (GDP) but by the end of this year it would reach 10.1% and by Dec next year, the government expected 12.3% revenue.

Dismissing growing criticism of the Budget as irrelevant, MP Siyambalapitiya said that some Opposition lawmakers wanted the government to enhance relief while some opposed the increase in taxes. The State Minister explained that VAT had been greatly expanded by reducing the list of items so far exempted by the indirect tax. The State declined to reveal the 85 items exempted from a list of 138 though he assured VAT wouldn’t be imposed on electricity.

The Island sought an explanation from the State Minister regarding recent statement issued made by the Committee on Public Accounts (COPA) that taxes, penalties and interest amounting to Rs 943 bn were yet to be collected by the Inland Revenue Department (IRD). The refusal by the IRD to fully takeover and operate the Revenue Administration Management Information System (RAMIS) installed a decade ago was also raised. In addition to that The Island pointed out COPA expressing concern over proper collection of VAT (Value Added Tax) against the backdrop of the government’s decision to increase that particular tax from 15% to 18%.

MP Siyambalapitiya said that out of Rs 943 bn in uncollected taxes, 82% had been held up pending the conclusion of the legal process. The State Minister said that though the progress was slow the government couldn’t do anything about it.

“We couldn’t force them to pay. They have an opportunity even to seek the intervention of the Supreme Court,” MP Siyambalapitiya said, adding that the amount referred to by COPA was the amount to be collected during the past two decades.

Referring to the Customs, the State Minister said that out of the Rs 60 bn yet to be collected by Customs, 95% was owed by state institutions.

Commenting further on the RAMIS project, the SLPPer said that the change of tax regime thrice during the past decade affected the operation of the system. The project had been also halted for want of funds, the State Minister said, expressing confidence a fresh initiative meant to complete the project was underway.