Author: TELO Admin

Thousands of Sri Lanka’s highly paid state workers protested against tax hikes, citing it as ‘unfair’ with most of them have been caught into the tax brackets for the first time.

The tax hike protest also saw hundreds of private sector workers also gathered in Colombo Fort, demanding a downward revision of the newly implemented taxes.

The protesters later went to a central Colombo Hyde Park to continue their agitation after a court order issued them to clear the area.

Under a theme of ‘Repeal Oppressive Tax Refers’, workers representing 40 trade unions including all private and public sector banks, university lecturers, Port Authority, Ceylon Electricity Board (CEB), Government Medical Officers of Health participated in the protest.

“We don’t mind paying taxes, we know we have to contribute to government revenue,” K L Chandana, representing CEB Engineer’s Union told EconomyNext.

“Moving from one tax bracket to a higher tax bracket is unrealistic, especially with the inflation and global factors. Earlier we were in the green to pay taxes because the country wasn’t in hyperinflation and we had a better quality of life, but our income don’t match with inflation. So there’s no way we can squeeze another expense.”

The ongoing economic crisis has forced President Ranil Wickremesinghe’s government to impose high PAYE and personal income taxes up to maximum 36 percent depending on their income.

A person who paid a tax of 9,000 rupees on a 400,000-rupee monthly income will now have to pay 70,500 rupees as income tax, the latest data showed.

The government took a step back to exempt some allowances partially including for fuel, driver, and vehicle, a government document showed.

“We don’t mind paying fair taxes, we paid them earlier,” Udaya Ekanayake, an Administrative officer from Anuradhapura told Economynext.

“We are opposed to taxation because it is not in line with the economic crisis, inflation is exceeding 50 percent and we are being taxed by 32 percent.”

Meanwhile, the Government Medical Officers Association Media Spokesman, Chamil Wijesinghe said, the protest was the first warning and that if the government fails to respond, the unions will bring the country to a standstill.

“If the government still can’t understand, we are ready to take further actions and we will make the country come to a standstill,” Wijesinghe said.

A renowned actor and a new member of the Ceylon Mercantile Industrial Union Peter d’ Almeida told EconomyNext that the government should bring in higher corporate taxes and taxes on the super-rich reducing the burden on the general public.

“These people had enough of the burden which has been placed on people, with the so-called tax reforms and increased price in utilities, and the general increase in the cost of living,” Almeida told EconomyNext.

“And the sad part is people who ruined this country are still in power and it is people who have nothing to do with this facing the burden of rebuilding the country.
That is unacceptable.”

“A very high cooperate tax and taxes on super rich including wealth and capital gains should be in order.”

Sri Lanka’s President said on Wednesday that the island nation will remain bankrupt for at least three more years as he works to repair battered government finances following an unprecedented economic crisis.

Mr Ranil Wickremesinghe took office in 2022 at the peak of national unrest sparked by months of food, fuel and medicine shortages.

He has since pushed through tax hikes and negotiated with international creditors after a default on Sri Lanka’s foreign debt to clear the way for a sorely needed International Monetary Fund (IMF) bailout.

“If we continue according to this plan, we can rise out of bankruptcy by 2026,” he said during an address to Parliament urging support for economic reforms.

“Introducing new tax policies is a politically unpopular decision. Remember, I’m not here to be popular. I want to rebuild this nation from the crisis it has fallen into.”

He said in January that the economy may have contracted by up to 11 per cent in the last calendar year, when Sri Lanka’s foreign exchange reserves dried up and left traders unable to import vital goods.

But on Wednesday, he said the economy would return to growth by the end of 2023 as new revenue measures boosted government coffers.

Tax increases and the removal of fuel and electricity subsidies have been unpopular with Sri Lanka’s public, already hit hard by the crisis and rampant inflation.

Mr Wickremesinghe’s policy address took place at the same time as a huge trade union strike, with air traffic controllers, doctors and those in several other industries stopping work.

He said Sri Lanka had reached the final stage of IMF discussions to secure a preliminary US$2.9 billion (S$3.8 billion) bailout.

The process has been delayed by protracted debt restructure negotiations with China and other major creditors.

He said Sri Lanka was in direct discussions with China about its outstanding debt but had received “positive responses from all parties” and was working towards a final agreement.

AFP

The Government of Switzerland has contributed Swiss Francs (CHF) 500,000 (approximately Rs. 199 million) through UNICEF to meet the urgent needs of children impacted by the economic crisis in Sri Lanka.

With this funding, UNICEF will procure essential medical supplies, including medicines for treatment of illnesses and complications among children and women. In education, the funds will help children in disadvantaged schools continue learning and support catch-up classes to recover learning loss, including by providing transport allowance to teachers and daily snacks to students.

UNICEF will also support case management for children facing violence, neglect and family separation, including children with a disability.

“UNICEF and partners swiftly responded to the needs of the most vulnerable children from the outset of the economic crisis last year, with thanks to the support of donors. This contribution from the Swiss government and people is crucial in sustaining the response and protecting children from the effects of the crisis as it continues”, said Christian Skoog, Representative, UNICEF Sri Lanka.

The Swiss contribution will also be used to support data collection and analysis to assess the impact of the on-going crisis on households’ social and economic well-being and vulnerabilities, to help national and development partners put in place effective response strategies.

“Switzerland has worked closely with many partners, including UNICEF in addressing the needs of communities during crises such as the one that Sri Lanka faces now. This support demonstrates our long-standing cooperation with the people of Sri Lanka”, said Dr. Dominik Furgler, Ambassador of Switzerland to Sri Lanka and the Maldives.

UNICEF has issued an appeal for resources in 2023 to help 2.4 million most vulnerable children receive nutrition support, healthcare, clean drinking water, mental health services and continue learning.

The country has lost an estimated revenue of Rs.1 billion due to several crucial sectors launching a protest today, inconveniencing millions of citizens and leading to roads being blocked in the business hub of Colombo, senior economists said today.

Colombo University Department of Economics Professor Priyanga Dunusinghe told Daily Mirror that more than Rs.1 billion of losses had been faced by the country today due to the massive trade union action staged by doctors and several other professionals over the government’s new income tax policy.

Priyanga said this loss at this critical juncture was a blow to Sri Lanka’s development.

Another senior economist who wished to comment off the record said that such protests at a time when Sri Lanka was seeking international assistance for its debt relief sent a wrong signal to its global partners.

He said protests staged by crucial sectors cost the country billions and such losses were not feasible at the moment and also sent wrong signals to its international lenders.

“Opposing taxes is one thing but causing such a loss to the country is another. This sends a wrong message at a time when we are negotiating with our global partners for debt relief,” the economist said.

Over 40 trade unions including the Government Medical Officers’ Association (GMOA), Ceylon Electricity Board (CEB), University Lecturers, Sri Lanka Ports Authority (SLPA), National Water Supply and Drainage Board (NWS&DB), several banks, Sri Lanka Air Traffic Controllers Association (SLATCA) and Ceylon Petroleum Corporation (CPC) staged an island wide trade union action today to oppose the government’s new income tax policy.

The main business hub of Fort came to a standstill in the early hours of today as large groups gathered near the Fort railway station resulting in the military being called in to maintain calm.

The Trade Union Collective Centre (TUCC) told Daily Mirror that the Trade Union action had been a complete success and gave a direct message to the government on how the people would be affected by the new tax policies.

TUCC Operation Board Member Mahinda Jayasinghe said the sudden implementation of a higher PAYE Tax was unfair to the people who earned a higher salary because they had to adjust to maintain their lifestyle accordingly.

Jayasinghe said most of the professionals including doctors would be forced to migrate because of this. “They have come to a situation where they are unable to survive,”he said.

In an affidavit to the Supreme Court, Commissioner General of Election Saman Sri Ratnayake stated that the Election Commission has faced great difficulty in taking necessary steps to hold the Local Government Election due to the failure of the Secretary to the Treasury and other relevant officials to release required funds for the conduct of the election.

Accordingly, Commissioner General of Election Saman Sri Ratnayake urged the Supreme Court to make appropriate orders on the Secretary to the Ministry of Finance and other officials to facilitate the holding of Local Authorities Election in accordance with the law and in accordance with the undertakings given by the Commission to the Supreme Court.
Saman Sri Ratnayake stated that he is submitting this affidavit in consultation with the Chairman of Elections Commission.

Ratnayake stated that the Chairman of the Ceylon Petroleum Corporation in his letter dated 31/01/2023 and the Chairman of the Ceylon Electricity Board in his letter dated 02/02/2023 have informed the Chairman of the Elections Commission about their difficulties to provide electricity and fuel for the election as requested.

He maintained that the Ceylon Petroleum Corporation and the Ceylon Electricity Board has a duty to ensure the provision of fuel and electricity respectively for the purpose of the election and that any move to deny fuel and the supply of electricity for the election purposes will result in a hindrance to the election process.

Ratnayake informed court that an amount of 10,000 million rupees has been allocated in the annual estimates for the year 2023 for the activities of the Local Authorities Election and this has been approved by Parliament.

Ratnayake further said though he requested the Secretary to the Ministry of Finance, Economic Stabilization and National Policies to release the imprest for the initial arrangements of the election, the said request has not been fulfilled.

He further said by his letter dated 24/01/2023, he requested the Secretary to the Ministry of Finance, Economic Stabilization and National Policies to release 100 million rupees by the last week of January and the remaining imprest to be released in the month of February.

He stated that it is not necessary to arrange the aforementioned amount of 10,000 million rupees all at once to carry out the activities of the election. According to data from previous elections, less than 25% of the total expenditure on elections are incurred before the election.

Member states of the Paris Club have expressed their commitment to negotiate debt restructuring with Sri Lanka in accordance with the comparability of treatment principle and with the goal of restoring debt sustainability, President Ranil Wickremesinghe’s office said.

Saudi Arabia and India have also expressed their support and commitment to providing financing assurances, the president’s office said in a statement on Tuesday February 07.

The Paris Club members urged other official bilateral creditors, including China, to do the same in line with the International Monetary Fund (IMF) programme, it added.

Earlier in February, the Paris Club members informed the IMF of their support for Sri Lanka debt restructuring.