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Sri Lanka cabinet clears laws to remove debt repayment levy

ECONOMYNEXT – Sri Lanka’s cabinet of ministers had cleared changes to the Finance Act that are required to remove the Debt Repayment Levy from banks, the state information office said.

The DRL was a direct tax slapped on banks by the last administration, which raised state sector workers salaries sharply.

President Rajapaska, as part of his ‘ fiscal stimulus’ package listed the DRL as one of the taxes to be removed.

The cabinet had cleared the changes to be gazetted and brought to parliament.

Direct taxes hurts future investment, growth and jobs by destroying investible capital, which is why countries with little or no direct taxes such Dubai have high levels of employment, many times the population of the country.

Indirect taxes however falls on consumption not investment. Indirect taxes also captures any ‘black’ money as soon as it is spent on consumption.

However under the ‘stimulus’ package, Value Added Tax, an indirect tax has also been slashed by 15 to 8 percent causing concern. (Colombo/Feb10/2020-SB)

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