The 2018 Budget should focus on moving away from ‘mere rhetoric’ to ‘time bound actions’ with the private and public sectors getting on to serious work if the country is to achieve its long term dream of higher economic growth and prosperity, according to a group of economists and business leaders.
Candor Group of Companies Group Director Ravi Abeysuriya said, “The country needs to move beyond economic policy statements and economic summits, towards KPIs, time bound action plans and real implementation if we are to achieve our dreams.” It’s time that the public and private sector roll up their sleeves and get to work.
Chevron Lanka Lubricants Managing Director/ CEO Kishu Gomes said measures should be in place to encourage local production by expanding the duty gap between raw materials and finished good importation.
This is the only way to minimize foreign currency drain to expand our local economy. Successive governments have in their vision said this but the decisions actually taken have been adverse
He said steps should be taken to formalize private education to earn foreign revenue while making private education more affordable to local students. Of the 300,000 students who sit the Advanced Level examination only about 26,000 students are eligible for university education.
It is estimated that over Rs. 20 billion foreign currency is drain out due to students spending huge amounts on higher education in the US, UK, Australia, China, Bangladesh, Nepal and India of which only a small percentage return to work in the country.
“This impedes our efforts as a country to expand the intellectual capacity. Private medical colleges should be encouraged to earn foreign revenue. Nepal, China and Bangladesh have developed the education sector to boost foreign revenue. If so why can’t we do it,” Gomes said.
He said there should be consistent policies for the private sector. There has to be a ten-year policy framework that will not change as and when governments or ministers change so that the investors can take a long term view and expand their businesses to grow the economy. Gomes said measures should be taken to reduce the PAYE tax. The 24 percent PAYE tax is too high to encourage youth to join the private sector and as a result we see 1.3 million youth driving three-wheelers wasting the country’s valuable human resource capacity.
“The income tax on export revenue should be reduced. It has been increased to 14 percent from 10 percent. Revenue in this case is a huge benefit to the country,” Gomes said.
He said the retirement age for the government and private sector should be raised to 65.
We see a dearth of workforce. Extending the retirement age will ensure a larger workforce. Most companies that are listed in the CSE have independent directors who are over 60 years, dominating the corporate boards. This proves the point that at 60 they reach their peak.
JB Securities Managing Director/CEO Murtaza Jafferjee said measures should be taken to rectify some of the inconsistencies in the new Inland Revenue Act so that it is more equitable and less distortionary.
The taxation on vehicles should be rationalized to ensure that it is in line with international norms.
He said steps should be taken in the 2018 Budget to put the fuel price formula in place since the current prices significantly undercover the taxes on fuel in the context of rising global crude oil prices.
Unless this is done speedily all the good work carried out under the monetary and fiscal policy will be of vain.
“Excess tariff protection through para tariffs makes local industries uncompetitive and takes away the incentives to improve productivity and comes at a huge cost to the consumers,” Jafferjee said.
University of Colombo Professor in Economics Sirimal Abeyratne said the tax collection mechanism should be established.
The tax collection mechanism currently is weak. There has to be an effective tax collection mechanism for the government to achieve its revenue targets. He said the authorities must be serious about the government expenditure which would be worse in the coming years due to rising debt service