The National Chamber of Exporters (NCE) of Sri Lanka has called for the Government to mandate the fiscal policy of the country.
In a press release, they stated that a severe shortage of foreign exchange has created a vacuum in fuel, domestic gas, medicine and raw materials which has also led to a social unrest. It is worsened due to the emergence of grey market and many imports are now taking place external to the country’s banking system. Anticipating a further devaluation of rupee, most export proceeds are not being brought back to the country.
“The NCE emphasises the importance of introducing a proper mechanisms to maximise Tax revenue of the country . Tax being an instrumental objective of fiscal policy, the Government of Sri Lanka mainly collects its tax revenue through Department of Inland Revenue, Excise and Sri Lanka Customs. This process is competently supported by the Department of Attorney General and the Department of Prevention of Bribery and Corruption. Regrettably, undue political influence has hindered this process, making Sri Lanka vulnerable as a developing country,” the release said.
“It is mandatory to have robust policies in place to help the country stand up and move forward. The NCE urges the government to facilitate the Department of Inland Revenue to emphasise all citizens to declare the wealth and exercise the existing laws related to collection of tax revenue. According to records, the total tax files are around 250,000 in a population of 21 plus million and six million households approximately,” they noted.
They also noted that all responsible stakeholders of Treasury, Central Bank and the team coordinating with IMF in debt restructuring must collectively act together in carrying out the immediate tasks at hand. It may also be endorsed by IMF as well since they require debt sustainability from Sri Lanka.
The NCE proposes that all foreign remittances receive an incentive rate of 30% more than the parity rate matching the rates by grey market. The additional value to be invested in a rupee time deposit of over 12 months, earning a higher rate of interest. Further, the additional incentive proceeds to be allowed through a time deposit and to be utilised for capital investments only, thereby contributing to the national GDP.
The NCE states that importing any item/s under open account should be further evaluated and streamlined. All commercial importers to be duly registered with the Department of Imports and must open tax files obtaining a TIN number which is to be highlighted in all documentation related to imports entered in all import documents enabling Sri Lanka Customs and IRD to monitor establishments.