President Anura Kumara Dissanayake has pledged further tax cuts in next month’s Budget, saying the reductions would be made without jeopardising the Government’s revenue target.
Addressing the National Convention of the National Intellectuals Organisation (NIO) at the P.D. Sirisena Grounds in Maligawatta, Colombo, on Saturday, the President said the Government had met its revenue targets, unlike in the past, when projected State income was not fully realised.
‘In 2025, we exceeded the revenue target: our revenue reached 110% of the estimated level. Some people ask: ‘Isn’t it easy to raise revenue by imposing taxes?’ We would like to tell you that, after taking power, we did not impose a single new tax. We also reduced existing taxes to a considerable extent. In the forthcoming Budget, too, we will reduce some taxes. But we will do so without jeopardising our revenue target,’ he said.
He said public debt, which stood at about 114% of GDP in 2022, would be brought down to between 90% and 95%.
President Dissanayake said Sri Lanka was yet to achieve the economic and social transformation people voted for two years ago, as his Government had spent its first two years laying the economic foundations needed for such a change. He urged professionals to support his reforms.
‘Our challenge during the first two years has been to establish the economic conditions necessary for an economic transformation. If we compare the past two years, we have made considerable progress in preparing the economic foundations,’ he said.
The President said Sri Lanka had recorded its lowest budget deficit in recent times last year, along with a current account surplus of $ 1.8 billion, the largest in the country’s history.
‘Previously, there had been only about three occasions when the current account showed a surplus. On all three occasions, it was close to or below $ 300 million. That is economic progress; it is not an economic transformation,’ he said.
Acknowledging the rise in the cost of living, President Dissanayake blamed it mainly on higher energy costs.
‘The rise in inflation has made it more difficult for our people to purchase goods and services. The main cause has been the state of war that developed in the Middle East. That war had a major impact on our supply routes,’ he said.
He said global diesel prices had risen by about 88% and petrol prices by 80% since the conflict began, and that the Government continued to subsidise diesel by Rs. 70 for every litre sold. He hoped to present several proposals in the Budget to offset the impact of fuel costs through other sectors, but did not elaborate.
‘I believe we now need a new program for economic transformation,’ the President said, adding that fisheries, agriculture, ports and logistics must be taken to a new level to harness the country’s full growth potential.
He said 28% of the workforce was engaged in agriculture, which contributed only 7% to GDP, underscoring low productivity and inefficiencies in the sector.
‘Unless we transform the labour engaged in agriculture into productive labour, we cannot achieve a major leap in agriculture. Through various legal restrictions, extensive land laws and laws governing paddy lands, farmers have been tied down rather than liberated. If we are to take this leap, we must free farmers from the laws that bind them. That is economic transformation,’ he said.
President Dissanayake said the Government was preparing plans for this, and was also working on improving the productivity of small and medium-sized industries by providing them with capital at affordable rates.