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Friday February 23rd, 2024

Sri Lanka’s inland revenue (amendment) bill can be passed by simple majority: SC

ECONOMYNEXT – Sri Lanka’s new Inland Revenue (Amendment) Bill is not inconsistent with the constitution and can be passed in parliament by a simple majority, the Supreme Court has determined.

The bill was challenged in the Supreme Court in terms of article 121(1) of the constitution.

Speaker Mahinda Yapa Abeywardena told parliament on Tuesday September 05 that the court has held that neither the bill nor any of its provisions is inconsistent with article 12 of any provisions of the constitution.

Minutes after the Speaker’s announcement, State Minister of Finance Shehan Semasinghe tweeted that the court’s determination will establish credibility both domestically and internationally in relation to economic stability.

“Few opportunistic political forces worked to destabilize the foreign debt restructuring process by delaying the domestic debt optimization programme by challenging the Gazette dated 14th July 2023 related to the Inland Revenue (Amendment) Act.

“The attempt was to weaken the emerging economy and achieve narrow political goals. However with today’s determination of the Supreme Court announced in parliament will establish credibility both domestically & internationally in relation to economic stability,” he said.

Mahindananda Aluthgamage, a government MP who chairs the Sectoral Oversight Committee on National Economic and Physical Planning, said on August 17 that the proposed amendments to the inland revenue act will serve to address purported underperformance of Inland Revenue Department (IRD) officials in a bid to enhance income tax collection.

The objective is to make formidable decisions regarding officials not contributing effectively to the state’s tax revenue enhancement, a statement from the president’s media division (PMD) quoted Aluthgamage as saying.

The MP noted that there is only one person in the country who pay taxes in excess of 300 million rupees.

“There’s only one person in Sri Lanka who pays more than 300 million rupees in tax. Only three people between 50 million and 100 million rupees; only 16 people between 25 and 50 million; 137 between 5 and 10 million; 508 between 2 and 5 million; 804 between 1 and 2 million, and 5,473 between 500,000 and 1 million rupees,” he said.

An immediate overhaul of the nation’s tax policy is imperative, the PMD quoted Aluthgamage as saying.

Speaking at a meeting of the committee he chairs on July 06, Aluthgamage said only 31,000 Sri Lankans out of some 500,000 persons with registered income tax files pay personal income tax while 328 registered limited companies out of 105,000 contribute to 82 percent of tax revenue.Sri Lanka has been compelled to increase its tax revenue in the wake of the 2022 currency crisis, the worst in decades, and the subsequent agreement with the IMF over a 2.9 billion dollar extended fund facility. However, resistance to a hike in progressive personal income tax has been high, with many high-income earning professionals in the state sector holding a number of protests against the increase.

Value added taxes were also raised to 15 percent from 8 percent last year. Another 2.5 percent cascading tax was imposed on top of VAT, the effect of which was estimated to be around 4.5 or more through the cascading effect.

The IMF had reportedly asked the cash strapped Sri Lankan government to impose taxes on all who receive monthly income of above 41,667 rupees as a prior condition for the bailout, but

President Ranil Wickremesinghe’s administration had instead imposed a Pay As You Earn (PAYE) tax on everyone who earns over 100,000 rupees a month.

The IMF has defended the tax hike, arguing that creditors and investors will not support Sri Lanka because tax to GDP had fallen steeply. Taxes, including value added taxes were slashed in 2019 December to target a ‘persistent output gap’, after serial currency crises from flexible inflation targeting reduced growth. (Colombo/Sep05/2023)

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  1. KD says:

    Why should people pay high taxes when we have incompetent parliament members and a President and PM wasting billions on unnecessary government expenditure. First we need to reduce parliament from 225 to 9 and cut 90% of ministries. Then lets talk about paying more taxes.

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  1. KD says:

    Why should people pay high taxes when we have incompetent parliament members and a President and PM wasting billions on unnecessary government expenditure. First we need to reduce parliament from 225 to 9 and cut 90% of ministries. Then lets talk about paying more taxes.

Sri Lankans may need to wait for Monetary Board meeting minutes despite new Act

ECONOMYNEXT – Sri Lankans may have to wait more time to read the meeting minutes of the Central Bank’s Monetary Board, a top official said, despite a new act that has made the central bank to be more transparent and accountable for its decisions.

Many central banks including the United States’ Federal Reserve, India’s Reserve Bank, and Bank of Mexico release the minutes of their monetary policy meeting to ensure transparency.

The new Central Bank Act passed by the Parliament in line with the guidance by the International Monetary Fund (IMF) includes measures for Sri Lanka’s central bank to be more transparent and accountable.

These measures include releasing the Monetary Policy Report every six months and the first such report was released on February 15.

However, the central bank has not taken a decision to release the minutes of the Monetary Board meetings on the monetary policy.

“Going forward, one day this could happen,” Chandranath Amarasekara, Assistant Governor at the Central Bank told reporters on Wednesday (21) at a media briefing.

“Right now, we have just started working on the new Central Bank Act. We are not there yet. There is no such decision on releasing minutes yet.”

The central bank in the past printed billions of rupees to keep the market interest rates artificially low and provide cheap funding for successive governments to propel a debt-driven economy.

It’s decision, however, led Sri Lanka into an unprecedented economic crisis in 2022 with sovereign debt default.

It also propped up the rupee currency artificially in the past to maintain a stable exchange rate at the expense of billions of US dollars. The move also contributed for the economic crisis and later the central bank was forced to allow over 60 percent depreciation in the rupee in March 2022.

However, none of the top central bank officials was held responsible for wrong decisions to hold interest rates artificially low with money printing and propping up the rupee. (Colombo/Feb 23/2024)

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Amid mass migration, Sri Lanka to recruit volunteers as English teachers

ECONOMYNEXT- Sri Lanka is planning to appoint foreign and expatriate volunteers to teach English for Sri Lanka students, the Ministry of Higher Education said, amid thousand of teachers migrating to other countries after the island nation’s unprecedented economic crisis.

Over five thousand teachers have left the country with the Education Ministry permission using the government’s circular of temporarily leaving state jobs while tens of thousands of teachers have left the country without informing the relevant authorities, Education Ministry officials say.

That had led to an acute teacher shortage in the country.

Suren Raghavan, the State Minister for Higher Education said the shortage has aggravated because most of the graduates who have an English degree become writers and join the private sector due to higher salary.

“They do not join government schools. This is a problem all over the country which is why we need to have an online system,” Raghavan told EconomyNext.

Separately he said on Thursday at a press conference that he had spoken to Canadian and Australian High Commissions to get the assistance of where their English teachers who have experience in teaching English as a second language in South Asia.

He also said that there is a number of teachers in the Unite Kingdom have shown interest in teaching English and they have experience in teaching in other Asian countries such as Burma and India while the teaching would be done free of charge.

The new move also comes at a time when the country’s English literacy rate is on the decline, according to the Minister.

President Ranil Wickramasinghe announced the English-for-all initiative three months ago with plans to improve English literacy at school and university level. (Colombo/Feb 23/2024)

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Sri Lanka tea production up 1.4-pct in Jan 2024, exports up 6.8-pct

ECONOMYNEXT – Sri Lanka’s tea production was up 1.4 percent to 18.73 million kilograms in January 2024, with high growns falling and low and mid growns rising, industry data shows.

High grown tea in January 2024 was 3.56 million kilograms, down from 3.36 million, medium growns were 2.6, up from 2.5 million kilograms and low growns were 12.56 million, up from 12.32 million kilograms last year.

Exports, including re-exports were up 6.88 percent to 18.76 million kilograms, industry data published by Ceylon Tea Brokers show.

Export earnings were reported at 102 million US dollars, up from 99.5 million dollars last year. The average FOB price was 5.45 US dollars a kilo down from 5.67 dollars last year.

Tea in bulk was 8.5 million kilograms valued at 12.79 billion rupees, tea in packets was 7.8 million kilograms valued at 13.1 billion rupees and tea in bags was 1.8 million kilos, valued at 5.06 billion rupees.

The top buyer was Iraq with 2.5 million kilos, up from 2.1 million last year followed by the UAE with 1.99 kilos, up from 1.86 million last year.

Russia bought 1.98 million kilos, down from 2.0 last year, Turkey bought 1.72 million kilos, from 2.3 million last year, while Iran bought 1.32 million, up from 614 million last year. (Colombo/Feb23/2024)

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