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” This will no doubt be a challenge, given that the tax to GDP ratio is currently around 10 percent. The Chamber also cautioned against compromising on important public investments in social infrastructure in the effort to substantially cut the deficit.
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The focus should be on ensuring efficiency of public spending and raising tax revenues in a way that does not hurt growth as well as equity. The indication that that the Super Gains Tax, and similar retrospective and business un-friendly taxes, will not continue in the future is encouraging, as such taxes hurt entrepreneurship and provide negative signal to investors.
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Proposed changes to the export policy and promotion regime are also welcome, the statement said, including the creation of a new International Trade Agency.
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“This will be critical in aggressively pushing Sri Lankan exports into current and new markets abroad.” Sri Lanka has not had a robust and comprehensive trade policy strategy for some time now, while many other competitor countries have, it added. The Chamber also welcomed moves to manage the ETF and EPF state pension funds independently from the Central Bank.
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“This is an important step towards better governance of people’s pensions and ensuring higher returns to their retirement savings,” it said.
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Introducing a pension scheme for private sector workers is crucial to ensure that incentives on public sector jobs and private sector jobs are neutralized, and this will contribute to some easing of labour market rigidities, it also said. Other reforms to modernize labour legislation must also be simultaneously pursued, to cater to the emerging needs of enterprises and workers, the statement said.
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It also welcomed the focus on small entrepreneurs and regional economic development as there still remains significant gaps in prosperity between leading and lagging regions.
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