Ex-PUCSL Chief warns of further economic contraction in 2024

Saturday, 6 January 2024 00:21 - - {{hitsCtrl.values.hits}}

Warns economy will contract by further 4% this year
Questions Govt’s move to levy 18% VAT on citizens grappling with economic crisis
Stresses tax revenue can only be generated when people have means to earn an income
Says taxing those without income will create long term issues such as nutritional deficiencies and educational gaps

Former Public Utilities Commission of Sri Lanka Chairperson and Presidential hopeful Janaka Ratnayake yesterday warned that economy will contract by a further 4% this year.

“The economy contracted by 9% last year and is projected to contract by 4% this year,” he said. Given the circumstances, Ratnayake questioned the Government’s decision to impose an 18% Value Added Tax (VAT) on citizens already grappling with the challenges of a contracting economy.

“Due to the misguided belief of leaders who think the nation can be developed by taxing those without income, malnutrition is likely to escalate, and a persistent economic downturn will result in serious long-term issues,” he said.

Ratnayake emphasised that tax revenue can only be generated when people have the means to earn an income. Taxing those without income, he pointed out, would leave them without the basic necessities of food and drink.

“The consequences of this approach are highly dangerous. Long-term issues such as nutritional deficiencies and educational gaps pose a significant threat. The repercussions may only manifest in 20 or 30 years. If this trend continues, by the time the current President develops the country in 2048, a significant portion of the population will be grappling with malnutrition,” he added.

He stressed the urgency of establishing a system to ensure that the public has access to three meals a day without resorting to humorous measures such as taxing the downtrodden. “This can be achieved through Government revenue generated from sustainable economic activities. True development can only be achieved by avoiding heavy reliance on loans,” he stressed.