Govt. says contentious new personal income tax is a short-term economic development strategy

Wednesday, 8 February 2023 00:42 - - {{hitsCtrl.values.hits}}

Amidst mounting Opposition, the Government yesterday claimed that the contentious new Personal Income Tax is a short term economic development strategy.

This view was shared by Treasury’s Financial Policy Department Director General Dr. Kapila Senanayake at a meeting with trade union leaders and representatives of civil organisations. Dr. Senanayake told the meeting that the tax on personal income was imposed as a short-term strategy to resurrect the country from the existing economic situation, and this new tax system in Sri Lanka is of a meagre percentage compared to other Asian countries.

Senanayake also stated that there is an opportunity to discuss short-term strategies to provide some relief by considering trade union leaders’ and civil organisation representatives’ views and suggestions on the new tax system.

The meeting was held on the instructions of President’s Secretary Saman Ekanayake and was chaired by President’s Trade Union Director General Saman Ratnapriya and Dr. Senanayake.

According to a statement from the President’s Media Office, Ratnapriya told the meeting that the new tax policy that is assessed at the time of earning has created difficulties for Government and semi-Government employees, and as a result of the issues they have experienced, they have responded professionally. It was also made clear that the main goal of this conversation was to gather concepts and recommendations to find solutions to the current issues.

Ratnapriya also stated that these conversations will result in swift short-term solution recommendations that may be taken to address the difficulties that have emerged. These quick short-term solution proposals will be presented to the President and the Prime Minister.

Dr. Senanayake, had also explained in great detail about the Government’s revenue, Government spending, and financial strategies used to reduce the annual budget deficit. He also mentioned that Sri Lanka has a very low percentage of personal income taxation when compared to other Asian nations.

He further explained the financial situation in Sri Lanka, problems of personal taxation, tax reforms related to personal income tax, the basis for increasing personal income tax and the implications of tax reforms.

In addition to outlining numerous tax rules, Senior Deputy Commissioner of the Department of Inland Revenue K.K.I. Eranda also described how taxable personal income is calculated as per the new tax law.

“The trade union leaders who took part in the discussion stated that there are issues with the new tax policy’s tax system that is imposed on personal income and that the trade unions should be consulted before creating the tax policy,” the statement from President’s Media said.

“The trade union leaders further demanded that fair services be given to the public for the taxes levied like in other countries, and prompt solutions should be provided to reduce the inconvenience the professionals face due to the new tax act faces,” it added.

Inland Revenue Department Deputy Commissioner W.M.G. Kumaratunga, Ministry of Finance Fiscal Policy Division Tax Adviser Tanuja Perera, Prime Minister’s Trade Union Secretary Chandraratne Pallegama, Trade union leaders, representatives of civil organisations and several others attended the event.