Wednesday, 04 December 2019 07:16

Interim government simplifies tax system

The government will be implementing a tax Policy framework with a view to creating a simple, transparent and efficient tax system, Finance Ministry announced.

This will also create conducive environment for the private sector for their business planning and investment decisions thereby more economic activities will be generated in the short to medium term, boosting economic growth.

The removal of Nation Building Tax (NBT) and the reduction of value Added Tax (VAT) to 8 percent will reduce prices of most goods and services which will also result in a moderation in inflation, Finance Ministry said.

Incentives provided for tourism, IT and enabling services, construction and property market, exports and rural agriculture and overseas employment earning for professionals are expected to drive the economy with price stability.

Government’s commitment towards a prudent fiscal management regime, is reflected at the outset itself, in its decision to rationalize the Cabinet of Ministers and its restrictions on non-priority public spending.

On the same lines, arrangements are in place to make appointments to key positions in State Owned Enterprises (SOEs) through a selection process, led by a special committee, with the aim of finding qualified and talented personnel to turn around the loss making SOEs to profitable entities.

The expected fiscal deficit for 2019 will be more than the estimated and could settle around 7 percent of GDP, due to both a significant dip in revenue than expected mainly due to slow growth and increase in election related spending.

Thus, the government will make a concerted effort to recalibrate its operations along a sustainable deficit reduction path towards 4 percent of GDP in the medium term, together with a rationalization of the debt stock to manageable levels.

These efforts will be complemented by the continued relationship with international financial institutions (IFIs) and development partners, who have committed to Sri Lanka’s progress and prosperity.

(LI)

 

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