Says will not vote on new tax reforms and requests SLFP members to do same

By Chamodi Gunawardana

The Joint Opposition yesterday argued the Government is unqualified to enter into the expected $ 1.5 billion loan arrangement with the International Monetary Fund (IMF) due to the present economic crisis in the country. 

Speaking at a media briefing MP Bandula Gunawardena claimed Sri Lanka has a minus economy or minus growth because it is struggling to repay its debts. He also insisted such an economic downgrade was taking place because of the inappropriate economic policies of the present Government. 

Finance Minister Ravi Karunanayake had earlier said the President Maithripala Sirisena’s coalition Government expects to receive a $ 1.5 billion loan from the IMF to shore up foreign reserves. An IMF delegation has already visited Sri Lanka to discuss the matter and undertake a forensic audit on the arrears and other liabilities of the Government.

Gunawardena alleged if the IMF delegation does carry out a detailed examination of the county’s economy, Sri Lanka will disqualify for IMF programs. 

“IMF visits each country to extend its support on managing debts better. We expect to exchange our opinions with the delegation on a suitable economic policy to be implemented in Sri Lanka,” the former education minister added. 

Criticising the special statement delivered by Prime Minister Ranil Wickremesinghe to parliament regarding new taxation including imposing capital gains tax and raising VAT, Opposition MP Prof. G.L. Peiris called on all Sri Lanka Freedom Party parliamentarians to vote against the new proposals of Wickremesinghe, which are expected to be placed before the House in the next few weeks.  

“Wickremesinghe adds burdens on the general public by increasing VAT and reintroducing capital gains tax. The Joint Opposition will never vote for such proposals and expects SLFPers who care for the country to follow us for the county’s interest,” Peiris said.

Earlier this month the Prime Minister in a seven-page statement slammed the previous government of former President Mahinda Rajapaksa for concealing debt accumulated by State-Owned Enterprises and other public companies, which had to be added to the consolidated fund by the Wickremesinghe-Sirisena administration.

The Prime Minister also outlined how the current Government decided to allow a forensic audit by the International Monetary Fund (IMF) ahead of a possible program between the two entities to increase fiscal consolidation. A new tax system likely to be implemented in 2017 is also under discussion between the Government and the IMF. Under the new measures Wickremesinghe announced that VAT would be hiked from 11% to 15%, while capital gains would be taxed for the first time since 1987. However, he insisted VAT increases would not be imposed on electricity bills and essential goods.

The new tax rates were decided at a special Cabinet meeting where VAT exemptions to telecommunications, private education and the health sector among others was ruled out to simplify the system. 

Wickremesinghe told Parliament the Government owed Rs. 9.5 trillion ($65.6 billion) or 74.9% of GDP, as he revised some of the main Budget numbers presented in November. He noted the former Government headed by Rajapaksa had not included Rs. 1.04 trillion in borrowing by State enterprises in the national debt, which was estimated at Rs. 8.48 trillion at the end of last year.