Tuesday Sep 24, 2024
Tuesday Sep 24, 2024
Thursday, 15 August 2024 05:49 - - {{hitsCtrl.values.hits}}
President Ranil Wickremesinghe on Tuesday announced plans to provide relief on personal income tax, as well as a comprehensive reform agenda for the higher education system. The announcements were made during a keynote address at the University Lecturers’ Conference, held under the theme ‘Transforming Sri Lanka’s Higher Education towards a Developed Nation’.
The President revealed that the Government is considering two proposals aimed at providing relief to the middle segments of society, including academia.
“We are now in the next stage of discussing tax thresholds. We have had a strong economic performance this year and hope to maintain it next year. We are considering adjustments to the personal income tax structure to provide relief to taxpayers,” the President said.
One proposal, currently under review by the Treasury and a counterproposal from the International Monetary Fund (IMF), are being evaluated to determine the best course of action.
As per the latest data released by the Central Bank, the Government’s total revenue during the first five months reached Rs. 1,616.78 billion. This includes Rs. 1,491.25 billion from tax revenue, Rs. 125.53 billion from non-tax revenue and Rs. 2.45 billion from grants.
“In the past two years, Sri Lanka faced severe economic challenges but managed to recover through skilled governance. The country has now signed agreements with various international entities, including the IMF, and must adhere to strict macroeconomic benchmarks,” he said.
President elaborated on benchmarks including achieving a 2.3% budget surplus by 2025-2032, reducing the public debt-to-GDP ratio to 95% by 2032, and increasing international reserves to $ 15 billion by 2028. Inflation should remain below 5%, and other financial targets must be met. Creditors have provided up to $ 10 billion in debt relief, and the IMF has offered $ 2.9 billion over three years. The government is also considering adjustments to the personal income tax structure to provide relief for taxpayers as part of broader efforts to make Sri Lanka an export-oriented and competitive economy.
“Before attending this event, I took part in an important discussion about the country’s economic situation. However, there may be some good news for you all as we proceed, which might help retain some of the lecturers in Sri Lanka,” Wickremesinghe said, hinting at potential tax relief.
The Treasury’s proposal suggests maintaining the current tax-free threshold of Rs. 1.2 million while widening the tax band from Rs. 500,000 to Rs. 720,000, keeping the top tax rate at 36%. In contrast, the IMF’s counterproposal also maintains the tax-free threshold but recommends widening the first tax band to Rs. 1 million, shifting all subsequent bands by Rs. 500,000 while keeping the top tax rate unchanged at 36%.
In his speech, the President stressed the critical role of higher education in driving economic development and highlighted the need for state universities to operate with greater autonomy.
He announced a plan to restructure State universities, allowing them to manage their finances independently and attract foreign students.
“We aim to elevate our universities to a higher standard. This will take time, but we need to start by restructuring state universities and providing more autonomy. Universities should have the freedom to manage their finances and attract foreign students,” Wickremesinghe said.
The President also outlined plans to establish new technology-focused universities and expand existing institutions.
Additionally, he discussed the potential for collaboration with international universities and the introduction of associate degrees focused on job-oriented education.
“We propose associate degrees that are job-oriented, with the option to pursue Bachelor’s or higher diplomas later. This is to address the concerns of many students who ask why they were educated if they cannot find jobs,” the President added.
Wickremesinghe also touched on the broader economic challenges facing Sri Lanka. He outlined key macroeconomic benchmarks agreed upon with international creditors, including a target to achieve a primary budget surplus of 2.3% by 2025-2032 and reduce the public debt-to-GDP ratio to 95% by 2032.
“Our economy is growing, but we need to accelerate growth. We must focus on maximising the benefits of our human resources, and to do this, we need a top-class education system,” he stressed.
