The budget has no solutions to worsen FOREX and the economic crisis – Eran – The Island
Former State Finance Minister Eran Wickramaratne said the 2022 budget presented by Finance Minister Basil Rajapaksa had an unrealistic dream of an 8.8% deficit by their own estimate. However, according to the 2003 Fiscal Responsibility Law, the budget deficit cannot exceed 5% of GDP.
“As a responsible opposition in parliament, we cannot agree with the government seeking parliamentary approval of a budget proposal that violates the provisions of the Fiscal Responsibility Act 2003,” Opposition MP Wickramaratne said during the budget debate at second reading.
” It’s illegal. Are you asking the supreme legislature of the land, which makes these laws, to allow you to break these laws? Do you want to violate the law and the sovereignty of the people and expect us to raise our hands in favor of this violation of the law? »Asked MP Wickramaratne
Speaking further, he said that when looking at the budget it is evident that the government presented inflated statistics and overestimates of its unrealistic dreams. This government is backing down. The government had estimated the revenue for 2021 at 2029 billion rupees, but it estimated the revenue at only 1.561 billion rupees with a shortfall of 500 billion. Today, government revenue for 2022 is expected to be 2.284 billion rupees. Does this mean that turnover will be increased by around 45% to Rs 800 billion within a year? Increasing it by a maximum of 10% or 12% would be more realistic. This government has a constant habit of lying and deceiving this House and the public. So naturally, this is a daydream presented as an income forecast.
When we came to power in 2014, state tax revenue as a percentage of GDP was 10% and we systematically increased it to 13%; it was methodically planned and implemented. Here we remember the former Minister of Finance, the late Mangala Samaraweera, who guided the plans to increase government revenue. We had a vision and a program for the development of the country through the increase in state revenues and the budgets that we presented reflected that.
Before this government came to power, there was a lie they spread. That is to say, our government taxed everything and operated on taxes. The person who concocted these so-called slogans for Gotabhaya Rajapaksa’s 2019 campaign was Basil Rajapaksa, his campaign manager.
I would now like to focus on increasing government revenue. There is an attempt to increase revenue through taxes in the budget for 2022. The budget proposed levying a one-time additional tax of 25% on businesses or individuals who had taxable income of more than 2,000 million rupees in the years 2020/2021. while increasing VAT from 15% to 18% for banks and financial services. In addition to VAT, it is proposed to introduce a new GST as well as a social security tax. Instead of a single turnover tax, there will now be multiple turnover taxes.
These taxes will also weigh on small and medium-sized businesses. Shouldn’t we encourage medium-sized enterprises to develop? Is this the manufacturing economy they envisioned? It is indeed a great tragedy. The problem is not really tax collection. To protect social justice, taxes must be collected systematically. There is no dispute about this. But we need a coherent tax policy. In 23 years, Sri Lanka has changed VAT 11 times, and in contrast New Zealand in 23 years has revised it only twice. One-off taxes are arbitrary and disrupt private sector business plans. When those who do not know anything about running an economy set up complicated tax structures, no investor will come to Sri Lanka. The private sector needs a predictable and coherent tax policy.
He also said that in the current economic and government context, only the Rajapaksa family and their acolytes have the opportunity to carry out all kinds of activities. This does not surprise us. Further, Wickramaratne recounted that Mahinda Rajapaksa’s administration took over the airline in 2008 from investors at Emirates Airlines, sparked by an incident in which the presidential entourage were denied seats on a commercial flight. The airline had accumulated a loss of over 250 billion rupees just between 2008 and 2021. Who bears these costs? It is innocent people who have never set foot on the plane who pay for it. When investors reflect on how the emirates have been treated, they will have reservations about the investment climate in Sri Lanka. In this context, Port City is also a dream that must be done with caution.
Not all investors resort to means like paying commissions to start a business. In general, investors need trust in the host country. To this end, we must have a friendly foreign policy, ensure the rule of law and guarantee human rights. Investors are concerned about the protection of human rights and the way the country treats local businessmen. In addition, these values have no place in the overall policies of this government.
All wrongs will end. We urge the government not to mislead the people with racist and confrontational propaganda. Our foreign policy is extremely weak, as is the state of human rights. The risk of losing export market opportunities has reappeared. The European SPG plus concession and the US SPG concession are very important to us. Europe, America and the Middle East in particular are the most important segments of our export market. It is thanks to this that the country obtains income in dollars. I urge the government not to further compromise these sources of revenue. When the Rajapaksa regime in 2014 cost the country the SPG plus concession, our government recovered with great difficulty. If our export market shrinks further, the economic catastrophe that will befall this country will not be trivial.
The budget proposed that 70% of our energy needs be renewable, but there is no provision to support the policy. The compensation promised to those who have suffered losses due to organic farming is another empty promise as no provision is budgeted to meet it. Defense spending increased while education and health allocations suffered. The allocation for health was 255 billion and was increased to 301 billion in 2021. Despite a pandemic, the allocation for health in the 2022 budget is 234 billion, a decrease of 67 billion compared to the last year. 52% of the country’s population are women, yet there has been no emphasis on increasing women’s participation in the labor market, maternity leave allowances, equal pay and other issues that discriminate against women. The issues of women who are not represented at cabinet level are reflected in this budget.
Alarmingly, but not surprisingly, around 2/3 of budget allocations are under the control of members of the Rajapaksa family. Yesterday, November 16, the whole country witnessed large-scale protests.
“The application of ‘one country, one law’ towards the government and the opposition is the opposite. Our people are facing unprecedented economic hardship that could worsen in 2022. It is a blessed country. Despite the current woes that the current government has inflicted on us, we are ready to take on the challenge and the responsibility of building this country for future generations, with the right vision, the right policies and a competent team, ”said MP Wickramaratne .