Tax revenue should be growth friendly - IMF

Tax revenue should be growth friendly - IMF

by Zulfick Farzan 21-03-2023 | 3:44 PM

COLOMBO (News 1st); The International Monetary Fund said that Sri Lanka must increase tax revenue in a growth friendly manner. 

Peter Breuer, the Senior IMF Mission Chief for Sri Lanka, told reporters that the current economic crisis has a number of origins including the governments' inability to meet government spending needs through revenue collection and Sri Lanka is among the countries that collect the least amount of fiscal revenue in the world. 

He said that Tax Reforms are badly needed to correct the imbalance, and only with appropriate tax receipts will the government be able to fund essential expenditures, and avoid further slashing critically important outlets. 

"These reforms will also help regain the confidence of the creditors, so that in the future they will once again finance the gap between revenue and expenditure," he said.

Peter Breuer further said that it is important that those who can afford it may commence contributions to the financing of necessary government expenditures.

"The tax package the authorities have introduced including the new tax rate schedule for Personal Income tax helps to meet the objectives. The tax rates proposed under the authorities program are also inline with similar countries who are contributing to Sri Lanka's support package, through the IMF," he said.

"So it is important to remember that there are many countries who have income levels comparable or may be less than Sri Lanka with much higher tax rates. We are looking at Sri Lanka to implement appropriate reforms," said Peter Breuer.