Eran warns implementing 30% tax on EPF/ETF will push workers into poverty

Thursday, 31 August 2023 03:01 - - {{hitsCtrl.values.hits}}

Says SJB disagrees with the imposition of new tax
Notes restructuring foreign debt would have been best
Slams Govt. of prioritising restructuring of domestic debt instead
Claims Govt. will fail to resolve financial crisis if do not restructure bonds wisely

Samagi Jana Balawegaya Parliamentarian Eran Wickramaratne yesterday charged that the imposition of 30% tax on EPF/ETF will effectively make workers paupers and push them into poverty.

The MP said that the Government’s income tax policy to attract an effective tax rate of 30% would require a salary above Rs. 500 000 per month. “Probably 90% of the working population draws less than 500,000 per month” he noted.

“This Government is now amending the income tax laws to impose a 30% income tax on EPF/ETF. This tax will apply on all of EPF/ETF income without any tax relief. Therefore, even an employee earning a monthly salary of Rs. 3, 000 will be liable to bear the tax of 30% on their savings on EPF/ETF. Is this justified against low income workers?” he asked.

Wickramaratne said the Government declared the economy bankrupt and entered into an agreement with the International Monetary Fund (IMF) to obtain a loan of $ 3 billion with restructuring the country’s debt as a condition.

“Foreigners invest in bonds of small countries looking for more income, absorbing the risk factor. Having already profited from the high interest/income, restructuring of said loans does not bear significant consequences to the investors. The Government has already declared bankruptcy and has stopped repaying foreign debt, including bonds. Although it was initially announced that the foreign bond will be restructured, the Government recently postponed the discussion with foreign investors for the second time. However, it is foreign debt that is best restructured,” he opined.

The MP slammed the Government for prioritising domestic debt restructuring instead. He declared it an injustice to the people of the country as the value of their investments has already taken a hit from inflation and devaluation of currency.

“If the Government does not act wisely in relation to the restructuring of bonds, Wickramaratne, a former banker and economist, said that the Government will not be able to successfully resolve the financial crisis,” he noted. The MP said his party disagrees with the proposed Government policy of imposing 30% tax on EPF/ETF.