Monday, November 23, 2015
The Budget – those who are debating in Parliament understand it the least!
All 128 pages long (English Version – see link – is more than most can fathom) http://www.lankabusinessonline.com/wp-content/uploads/2015/11/bgtspeech2016E.pdf
is a complete change of philosophy, that hardly any member of parliament can comprehend, which made ex-president Rajapaksa, the reader of 10 budgets incredulous! I believe parliament will take a whole month to debate it, but the only point they will understand and maybe want to change is the removal of duty free status of their vehicles!
This is an extremely complicated set of rules that will take a long time to completely sink in, and no doubt during the next month, we will be fed little tit bits, as to what it really means to most of us. As regards to changes necessary for implementation, that will take a long time to formulate, once the Bill becomes law.
Put simply it aims at having the same tax rate for Income, Corporate and VAT, with as few deductions as possible, after exempting the first 200,000 a month of income plus company perks that are currently not valued, that will be added to get to the 200,000.
It is hoped that by this exercise there will be more compliance, and I trust means are used by the Inland Revenue to easily identify those who neither have a tax file, or are paying any tax, but have an extraordinary expenditure level, that they cannot explain. The latter is the secret of getting another 100,000 tax payers into the net within the year, who most likely would NOT mind paying the 15% tax rate!
There are a lot of new ideas floating around, but how it will incentivize businesses to grow and prosper is another story, as that depends on the opportunities the Govt. and private sector give for a fair and unbiased playing field in which ti prosper, without having to pay protection money, or similar barriers to running and growing a business no matter what good intentions the govt. presents.
When one goes through the detail in the budget, it will be clear that the MPs are the least likely citizens of this country to understand a word of what is proposed, and for them to debate like peacocks preening NOT knowing what they are talking about is a complete waste of a month long period in parliament where many more important Acts are awaiting passage.
I would encourage the Govt. and opposition to pass the budget without delay!