Harsha raises concerns over imputed rent tax

Friday, 21 June 2024 03:58 - - {{hitsCtrl.values.hits}}

SJB MP Dr. Harsha de Silva

Charges it is an income tax not a property tax
Warns it could disproportionately impact a wide range of income earners
Calls for the exclusion of “owner-occupied houses” from new tax
Challenges Finance Ministry’s claim that only very wealthy will be affected

The main Opposition party Samagi Jana Balawegaya (SJB) MP Dr.Harsha de Silva yesterday expressed significant concerns regarding the proposed imputed rent tax under Sri Lanka’s agreement with the International Monetary Fund (IMF).

He emphasised that the imputed rent tax, categorised as an income tax rather than a property tax, could disproportionately impact a wide range of income earners.

In a detailed analysis, Dr. de Silva pointed out that an individual with a monthly salary of Rs. 150,000 currently pays Rs. 3,500 in taxes. However, if the same individual is subject to an imputed rental income of Rs. 100,000 per month, their tax liability would skyrocket to Rs. 21,000 per month, unless there are adjustments to tax thresholds and rates. The proposal aims to collect Rs. 150 billion by 2026, necessitating a broad tax net, but its fairness and practicality are under scrutiny.

Dr. de Silva challenged the Ministry of Finance’s claim that only the very wealthy will be affected by the new tax.

He questioned how the Treasury plans to raise Rs. 150 billionequivalent to 0.8% of GDPby 2026 through the taxation of imputed rental income, implying a wider impact than stated.

In light of these issues, Dr. de Silva commended President RanilWickremesinghe’s promise to amend the IMF agreement, taking into account strong objections from the SJB party and other concerned groups.

Dr. de Silva specifically called for the exclusion of “owner-occupied houses” from the proposed imputed rent tax to protect ordinary homeowners from excessive financial burdens.

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