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Sunday December 3rd, 2023

Every Sri Lankan NIC holder may have to open tax file in future – sources

ECONOMYNEXT – Every Sri Lankan who possesses a National Identity Card (NIC) may be urged to open tax files in the future, two top government sources said, as President Ranil Wickremesinghe’s effort to expand the tax net with opening of one million new tax files this year has failed.

Wickremesinghe in his 2023 budget last year urged all above 18 years of age to open a tax file as a first step, though many of those would not have to pay taxes because they will be below the tax-free thresholds and thus to introduce measures that identify high income earners specifically and get them into the tax net.

Contrary to President Ranil Wickremesinghe government’s expectation of 1 million new tax files, Sri Lanka’s Inland Revenue Department has found that out of 16 million potential taxpayers among citizens above 18 years of age, only 198,253 new taxpayers have registered so far in 2023.

“We are moving towards asking all those who have NIC to open tax files,” a top government source, told EconomyNext.

“Without widening the tax net, the authorities will be burdening only a few registered taxpayers.”

Another official, however, said the idea was only at a proposal level and not gone beyond that though that is likely with the future after the country adopts the unique identity card.

About 13,000 firms had registered to pay value added tax so far this year, while the Inland Revenue Department was trying to use technology (RAMIS) to track large numbers of people and collect tax.

However, there were still problems with the RAMIS revenue management system, IRD officials had told the parliament panel.

Admitting the failure to boost tax revenue in the recent time, President Wickremesinghe, who is also the finance minister, has proposed to establish a revenue authority in the 2024 budget to boost tax collection.

Sri Lanka is now collecting income tax from everyone who earns more that 10 dollars a day, after the revenue based fiscal consolidation and potential output targeting debacles drove the country to external sovereign default, in the wake of serial currency crises and stabilization programs which reduced growth and pushed up debt.

Unlike value added tax, where the state and rulers get to collect money after a free citizen engages in a growth generating transaction by their own choice, income tax allows the coercive state to appropriate money before a transaction is made by the person who earned the cash.

As a result, high income tax rates and the low tax-free threshold (about 300 dollars a month) on top of VAT and import duties has been blamed for brain drain.

Though income taxes and other capital consumption taxes like wealth tax kills future growth and jobs by destroying investable capital, they have the advantage of being designed to hurt, and makes taxpayers feel the weight of the state and the ruling class more than a painless value added tax would. (Colombo/Nov 20/2023)

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  1. Neranja says:

    This is a good initiative but the lawless corrupt politicians must follow the same and obey the laws.

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  1. Neranja says:

    This is a good initiative but the lawless corrupt politicians must follow the same and obey the laws.

Sri Lanka UGC wants to boost number of IT-related degrees

ECONOMYNEXT – Sri Lanka’s University Grants Commission is of the view to boost the number of Information Technology (IT) related degrees in state universities with an aim to pave the way for a digital economy.

Sri Lanka’shigher education system has been producing more graduates in Arts stream while the degrees in highly demanded IT and other engineering services are being looked at only now.

“We do have a high demand for engineering, science, AI, computer and electronical engineering

studies,” Chairman of University Grants Commission, Sampath Amaratunga, told reporters at aa media briefing on Friday

“However, while avoiding neglecting the humanities, we should develop new IT skills.”

Amaratunga confirmed that a student who studied in any stream could obtain an IT degree, including students who studied in the arts stream.

The UGC data show that out of 18,490 engineering technology stream students who sat for their Advanced Levels (A/L) in 2022, 10634 were eligible for university.

“Even streams like agriculture should be encouraged to use technology,” Amaratunga said. (Colombo/Dec 2/2023)

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Sri Lanka leader inaugurates Climate Justice Forum at COP28 in Dubai

ECONOMYNEXT – Sri Lanka President Ranil Wickremesinghe launched Climate Justice Forum (CJF) at the ongoing 2023 United Nations Climate Change Conference (COP28) held in Dubai in a move to gather support for vulnerable nations hit by climate-change led disasters.

This year’s climate summit held in Dubai’s EXPO2020 features a raft of issues for countries working to find common ground in tackling climate change, including whether to phase out fossil fuels and how to finance the energy transition in developing countries.

Wickremesinghe inaugurated the Climate Justice Forum at COP28 on Saturday and emphasized the critical importance of addressing climate issues with a sense of justice and equity.

The President had been in talks with many nations vulnerable to climate change disasters including African and South American countries to get their support for the CJF.

The move is to compel advanced and developed countries to look into the poor nations hit by the climate changes and help them to get over economic and debt burdens by either investing more in green energy initiatives or writing off debts to ease financial pressure.

Sri Lanka, which is now facing an unprecedented economic crisis, has seen increasing losses and damages, both human lives and physical properties due to climate change-led disasters like floods, drought, and earth slips.

In his speech at the COP28 forum, Wickremesinghe on Friday said the Climate Justice Forum will provide a platform for constructive and proactive engagements. (Dubai/Dec 2/2023)

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Sri Lanka IMF review goes to executive board on December 12

ECONOMYNEXT – The first review of Sri Lanka’s International Monetary Fund program is scheduled to go the lender’s Executive Board for consideration on December 12.

Sri Lanka officials were expecting the review to be completed in December as soon as official creditors gave their assurances.

According to the notice Sri Lanka had missed one performance criterion and has requested modifications.

Sri Lanka has outperformed on a number of quantity targets including inflation. In addition to quantity PCs there was also one non-accumulation of arrears.

There would also be re-phasing of access. The review was originally expected around September with another review based on December data, leading to September and March disbursements.

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