• Collective of Trade Unions and Civil Society Organisations calls upon members of EPF and other pension funds to rally against draconian anti-working people policy of Govt. and CBSL 

The Collective of Trade Unions and Civil Society Organisations against what they described as “#28Kollaya” yesterday alleged that the Central Bank is oblivious to the impact of Domestic Debt Restructuring (DDR) on the Employees Provident Fund (EPF).

The statement follows a meeting  between the CBSL and the representatives of the trade union alliance that protested against draining the Employees Provident Fund (EPF), Employees Trust Fund (ETF), and other superannuation funds by subjecting them to DDR on 28 August in front of the Fort Railway Station.

The Collective said  during the meeting, union representatives placed two demands:

1. Exclude EPF, ETF, and other superannuation funds from DDR. 

2. Pursue alternatives to attain domestic debt sustainability, 

a. Audit foreign exchange loss in international trade due to fraudulent invoicing and transfer pricing and recover foreign exchange hidden in offshore accounts. 

b. Tax BOI firms to increase government tax revenue.

c. Cancel bonds owned by tax evaders. Take over their deposits.

d. Audit public debt and cancel odious debt.

While making these demands, trade union representatives underscored that a genuine custodian would have consulted the EPF members before wrecking their only savings and explored viable alternatives. They pointed out that the CBSL has committed a fundamental breach of trust by keeping EPF membership in the dark and leaving no choice by ensnaring them between the devil and the deep blue sea, i.e., DDR or 30% tax. 

Representatives inquired from Governor Dr. Weerasinghe whether the proposed 9% interest rate payment for EPF is a belief or guaranteed by law. Moreover, they asked for the exact value that EPF would lose due to the slash of 0.5% from the GDP over 16 years. 

“CBSL Governor Dr. Nandalal Weerasinghe could not provide substantial answers. 9% is simply the Cabinet’s commitment, not a legal provision. The CBSL is yet to analyse how a 0.5% cut would affect EPF over 16 years. The Governor stated they would issue a press release on the impact on EPF in the future,” the Collective said in its statement.

In contrast, trade union representatives have studied the forecasts of the DDR provided by the CBSL and estimated a 45% cash flow loss to EPF by 2038. In addition, trade union representatives pointed out that the contraction of GDP coupled with a 0.5% slash would make it impossible to pay the claimed 9% interest rate in the coming years. While attaining debt sustainability is foundational to working people’s interests, it is unacceptable that the process will disproportionately burden the most vulnerable factions of the working class, the EPF members. 

The EPF members are already contributing more than the companies, banks, and other bondholders to the Government’s revenue by paying taxes, first as monthly contributions, second as annual return of the fund, and finally when funds are withdrawn at retirement. When banks pay a profit tax on net income, EPF members pay a tax on gross income. Moreover, a majority of EPF members pay taxes at 14% even though they earn below the taxable income. Application of either the 14% tax at present or the 30% tax proposed is a gross violation of the basic principle of taxation, paying according to one’s ability. 

Trade unions called upon the EPF members and members of the other pension funds to rally against the draconian anti-working people policy of the Government and the CBSL. 

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