Taxes were reintroduced as proposed by knowledgeable people as the only way to salvage the economy because revenue had decreased to insufficient levels due to wrong decisions in the past.
President Ranil Wickremesinghe making his policy speech in parliament yesterday said by end of 2019, 1.6 million businesses, companies and individuals paid taxes but by December 2021, the number of tax payers decreased to five hundred thousand.
He said that realizing the gravity of the situation, many institutions and organizations requested to revert to the tax system which existed in 2019.
In April 2022, the Sri Lanka Administrative Service Association (SASA) presented short-term proposals for economic and social revival.
Section 3.3 of said proposal states,
• Re-introduction of PAYE (pay-as-you-earn) tax system
• All officers of state enterprises should personally pay taxes from their salary and not through the relevant institutions and employers
• Re-introduction of Withholding Tax
• Suspension of all tax exemptions
• Revision of the income slabs for taxation and the level of turnover subject to Value-Added Tax
The SASA presented this proposal even before the negotiations with the International Monetary Fund were initiated.
He said that 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 situation it has fallen.”
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