Despite the recently imposed taxes including Pay As You Earn (PAYE), the Government foresees a Rs. 2.4 trillion (tn) Budget deficit this year (2023), stated the Chartered Accountants of Sri Lanka’s (CA Sri Lanka) Faculty of Taxation’s Chairman Tishan Subasinghe. 

“This year, even with the increased taxes, there will be a Rs. 2.4 trillion Budget deficit and this is mainly contributed to by the increasing interest. We (Sri Lanka) are printing money at a higher rate. Therefore, some Rs. 1.3 trillion would be added into interest payments.”   

He made this statement yesterday (21) during the panel discussion of the “Tax Forum 2023” organised by the Sri Lanka Institute of Marketing.

Subasinghe also noted that in 2021, Sri Lanka experienced a Budget deficit of Rs. 2 trillion while last year (2022), there was a Rs. 2.3 trillion Budget deficit due to the tax cuts that came into effect with the previous Government.  

When it comes to the tax revenue, this year, Sri Lanka expects Rs. 3.1 trillion with the tax increase. 

Subasinghe stated: “That is a Rs. 1.3 trillion increase” in comparison to the previous year’s tax revenue which was Rs. 1.85 trillion. He added that in 2019, it was around Rs. 1.7 trillion but that in 2020, due to the tax rate changes and concessions, it dropped to Rs. 1.2 trillion. Meanwhile, in 2021, the tax revenue was Rs. 1.29 trillion. 

Speaking in an interview with TV Derana, State Minister of Finance Ranjith Siyambalapitiya recently said that the Treasury is to obtain Rs. 100 billion in estimated revenue under the PAYE tax alone.

However, Subasinghe stressed that he does not observe a plan laid out by the Government to reduce recurrent expenditure. Due to this reason, people will be paying taxes when instead, the policymakers need to declare the cutting down of expenditure while imposing taxes.  

“We can cooperate like that, but here, we do not see a plan like that. If the question arises as to why we should pay taxes, where is the plan on recurrent expenditure? It remains the same. That is where we need to demand accountability and transparency.”