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Tuesday December 5th, 2023

Sri Lanka tax agency gets 198,253 new payers, 16mn more targets found

SALARY BILL: The salary bill has fallen to levels seen before ‘heedless spending’ allowed under revenue based fiscal consolidation began.

ECONOMYNEXT – Sri Lanka’s Inland Revenue Department has found 16 million potential tax payers among citizens agove 18 years of age and 198,253 new tax payers have registered in 2023, a parliamentary panel was told.

About 13,000 firms had registered to pay value added tax, the Committee on Public Accounts (COPA) was told.

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.

Sri Lanka introduced a new law to make it compulsory to register for tax, after spending zoomed under revenue based fiscal consolidation since 2015 and money was printed wantonly to boost growth under potential output targeting driving the country into default.

Under ‘revenue based fiscal consolidation’ from end 2014 to 2019, where cost-cutting (spending based consolidation) was abandoned current spending went up 74 percent to 2,301 billion rupees while tax revenue went up 65 percent to 1734 billion rupees.

From December 2014 to November 2019 tax revenues went up 65 percent to 1,612 billion rupees and recurrent spending went up 55 percent to 2,053 billion rupees, before taxes were cut in December to target ‘potential output’.

The salary and pension bill of state workers rose 123 percent to 1.26 trillion from 2014 to 2022.

Private citizens have to pay more taxes to support the public service, or face another default and money is borrowed.

By September 2023, the salary and pension bill was still about half of every tax rupee collected.

Related Sri Lanka income taxes up 291-pct to Sept 2023, PAYE up 497-pct

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 gets 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 investible capital, they have the advantage of being designed to hurt, and makes tax payers feel the weight the the state and the ruling class more than a painless value added tax would.

VAT which is taken in small quantities everyday, on the other hand conforms to the South Asian tax principle articulated by Chanakya of charging taxes like a bee taking honey from a flower without causing pain to the subject or making them leave the country. (Colombo/Nov18/2023)

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Sri Lanka stocks close up as some investor interest returns

ECONOMYNEXT – The Colombo Stock Exchange closed up on Monday, CSE data showed.

The All Share Price Index was up 0.22 percent, or 23.33 points, at 10,743.59.

The S&P SL20 index was up 0.68 percent, or 20.60 points, at 3,067.73.

Turnover was at 708 million. The banks sector contributed 189 million, while the food, beverage and tobacco sector contributed 176 million of this.

Sri Lanka’s stock market has seen some investor interest return after last week’s news that the country had managed an agreement on a debt restructuring deal with an official creditor committee, and foreign funds for some development projects resumed.

Top positive contributors to the ASPI in the day were Sampath Bank Plc (up at 71.50), LOLC Holdings Plc (up at 379.00), and Commercial Bank of Ceylon Plc, (up at 90.90).

There was a net foreign outflow of 52 million.

Citrus Leisure Plc, which announced that its banquet hall and revolving restaurant at the Lotus Tower would launch on or around Dec 9, saw its share price rise to 6.20 rupees. (Colombo/Dec4/2023).

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Sri Lanka rupee closes broadly steady at 328.10/30 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 328.10/30 to the US dollar on Monday, from 328.00/10 on Friday, dealers said.

Bond yields were stable.

A bond maturing on 01.06.2025 closed at 13.70/14.00 percent from 13.70/95 percent.

A bond maturing on 01.08.2026 closed at 13.90/14.10 percent from 13.90/14.05 percent.

A bond maturing on 15.01.2027 closed at 14.00/14.10 percent from 14.05/10 percent.

A bond maturing on 01.07.2028 closed at 14.20/35 percent from 14.15/25 percent.

A bond maturing on 15.05.2030 closed at 14.25/45 percent, from 14.20/45 percent.

A bond maturing on 01.07.2032 closed at 14.05/40 percent, from 14.00/45 percent. (Colombo/Dec4/2023)

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Gov minister highlights abortion rights, sex-ed for children, and Sri Lanka men killing their women

ECONOMYNEXT – Sri Lanka’s legislators have politicized the topics of rape and violence without addressing the elephant in the room, Jeevan Thondaman, Minister of Water Supply and Estate Infrastructure Development said in parliament on Monday (4).

“All the members here are talking about rape. What happens after that? We must talk about abortion rights. That is not something anyone wants to touch on, and that is why we are in this place right now,” Thondaman said.

“Despite alarming statistics on rape and violence, women are often blamed and punished for it. The criminalisation of abortion is a major example of this.”

Sri Lanka has some of the most restrictive abortion laws in the world. According to a 2016 estimate by the Health Ministry, he said, approximately 658 abortions take place a day, and close to 250,000 a year.

“That’s 250,000 women whose lives you are endangering.”

He added that what was needed at this point in time was comprehensive sexual education (CSE) for children and young people.

“Only through CSE in schools will children and young people develop, accurate, age appropriate knowledge attitude and skills; positive values such as respect for human rights, gender equality, diversity and attitude and skills that contribute to a safe, healthy and positive relationship.”

Thondaman pointed out that CSE plays a pivotal role in preparing young people for a world where HIV, AIDS, sexually transmitted infections, unintended pregnancies, and sexual and gender based violence still pose a risk to their well-being.

“CSE basically empowers children take control and make informed decisions freely and responsibly.”

Thondaman also highlighted the findings of a 2021 study (Fatalities_20211109_UNFPA) by the UNFPA and the University of Kelaniya that showed that a majority of women killed in Sri Lanka were murdered by those close to them.

“62 percent of homicides of Sri Lankan women are committed by either an intimate partner, ex-partner or family member. 84 percent are killed in their own homes by someone they know.”

Police and the judiciary have failed Sri Lanka’s women, the minister pointed out.

“Only 5 percent of these cases, between 2013-2017, were ever concluded. Men claim they were provoked, or are of unsound mind or have mental illness: These have been successful defenses. And the Police often express sympathy to this narrative as opposed to the victim’s.”

“We have a history of protecting oppressors.”

It takes 7-10 years for a child rape case to conclude, he pointed out.

Establishment of child courts are needed, he said, as well as several legislative amendments. “The government is working on a new law to reform the domestic violence act, reform of marriage and divorce laws to ensure there is an easier path to divorce: no one should be forced to remain in a marriage that is either abusive or not healthy.” (Colombo/Dec4/2023)

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