Budget Deeply Flawed: Nishan de Mel

Published on The Morning

The Budget for the fiscal year 2022, which was passed with a majority of 93 votes at its third reading in Parliament, is flawed, pointed out Colombo-based think tank Verité Research Executive Director Nishan de Mel.

He made this statement last Saturday (11) via a Tweet while quoting a web article that depicted Speaker of Parliament Mahinda Yapa Abeywardena endorsing the certificate for the Appropriation Bill No. 30 of 2021.

“Yesterday, the 2022 Budget that is seriously flawed, and set to steer SriLanka into deeper trouble, which got passed with 153 of a significant majority,” de Mel said.

He criticised Sri Lankan parliamentarians, saying they seem to be serving in fear to their party leaders instead of their own voters.

Issuing a public report on Budget 2022, Verité said that it fails in establishing a stable fiscal regime.

Further explaining, the aforementioned report said: “In January 2020, a new tax structure was established, introducing substantial reforms to major taxes including corporate and personal income tax, and VAT (Value-Added Tax). The stated objective of that change was to establish a stable and predictable regime of lower taxes for at least five years. The proposed Budget undermines those aspirations. Through measures such as financial VAT and surcharge tax, it introduces tax increases (reversing reductions), one-off taxes (reducing stability), and retroactive taxes (reducing predictability).”

The report further said: “The Budget also fuels macroeconomic instability by setting a path of high deficits. Using the Government’s own budget and economic data, Verité has projected that the budget deficits will remain around 10% and above till 2025.”

The 76th Budget was tabled in the House by Minister of Finance Basil Rajapaksa on 12 November.