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President Ranil Wickremesinghe
President Ranil Wickremesinghe yesterday making a special statement in Parliament set the record straight on the new, yet controversial, wealth tax which will come into effect from 1 April next year.
According to the President Media Division (PMD), Wickremesinghe said that the proposed Imputed Rental Income Tax will exempt a person’s first property. He emphasised that this tax is aimed at high net-income earners, not ordinary income earners, assuring that it will not affect those earning normal income.
In Parliament, the President said the following as per PMD: “We are going to have a wealth tax. And there will be a very high threshold. So 90 odd percent of people’s houses will be exempt from this. So don’t worry, your house is safe.”
However, he explained the rationale behind the decision to settle on rental income stating that it was based on rating. “Then we came up with a problem. Rates belong to the Provincial Council. So if you go on the rating list, there’s a possibility that the Court can say that this money belongs to the Provincial Council. So we want to get it here. So we have used a different formula called rental income.
Your income tax belongs to the central Government. It is the same,” the President said. It was pointed out that Sri Lanka has generally used ratings, but to overcome the Constitutional issue the Government formulated the new method.
“But it is going to have a very high threshold. And I do not think the vast majority of the people in this country should even be worried about their house. But we will have to get on to wealth tax. I know SJB is very, very worried that the billionaires who are with them will be taxed. Nevertheless, this is the reason for it,” claimed the President.
However, main Opposition Samagi Jana Balawegaya MP Dr. Harsha de Silva claimed that contrary to the President’s assurance, as per the deal with the International Monetary Fund (IMF) the new tax will encompass all houses.
SJB MP S.M. Marrikar said the new wealth tax is a further burden on already over-taxed people. He said that the Government was mercilessly taxing ordinary people instead of recovering money from stolen assets under the Rajapaksa regime despite promises. He emphasised private sector employees were most impacted as the Government is hell-bent on imposing tax after tax.
Marikkar also expressed doubt the Bill connected to wealth tax will be passed since the days of the current regime is numbered.
The Daily FT on Monday published the detailed statement issued by the Finance Ministry clarifying the new wealth/property tax. See https://www.ft.lk/top-story/Govt-justifies-new-controversial-property-tax/26-763167.
