Blaming the ‘Rajapaksa Regime’ of putting the country into a debt trap of nine trillion rupees Prime Minister Ranil Wickremesinghe making a special statement in Parliament today said the government would increase the Value Added Tax (VAT) to 15 per cent, re-introduce capital gains tax and introduce several other tax reforms to face the challenges ahead.
He said a flat statutory income tax rate of 17.5 per cent would be introduced.
Tax concessions granted on Telecommunication services, private education and health services would be removed. He said VAT would not be imposed on essential commodities and electricity while imposing it only on selected non essential commodities.
It was also announced that the proposal in the 2016 budget to increase nation building taxes to four per cent from the earlier two per cent would be suspended.
"Nothing done by the Rajapaksa Regime in the name of development, had provided any stimulus to uplift the economy. Hambanthota is a very good example. An airport was built but there are no airplanes. We are going back to China to talk about them. A harbour was built but with no ships. We are going back to China to talk about them. They did not have a plan to make use of this airport and harbour. At least no land had been reserved to even build an industrial zone around this port and airport. We went there and marked out the land for the first time.
“They only plunged the country into a debt trap. Because of the arrogant ways of the Rajapaksa Regime the country is in a debt trap of Rs.9.5 trillion. That means Rs.9,500 billion. Sometime it could even be as much as Rs.10,000 billion.
“The challenge before us now is to come out of this debt trap. I would like to emphasise that the foundation for that has been laid by the National Government. The majority opinion is that this challenge could be won by the National Government. The opinion of the International Community is also that. We like to state that many are looking at the way we are proceeding.
“The other challenge faced by us is the present global economic crisis. That is our second challenge. Therefore we have to minimize the impact on our country from the global economic crisis. On the other hand we have to come out of the impact of the debt trap.
“The oil prices in the world are decreasing today. Those who are saying that the fuel prices in the country should reduced because of that do not see the danger behind it. We like if we can completely reduce it. But there is a problem. On one hand the CPC is in debt to the tune of Rs.365 billion. Then we have to introduce a separate tax to pay that debt. On the other hand the economies of countries that depend on oil like Saudi Arabia, Oman, Jordan and Kuwait are facing problems. As a result job opportunities in those countries are reducing. The Sri Lankans doing jobs in those countries might even lose them. The salaries might become less. We should not forget this danger.
“The decrease in oil prices effects Russia as well. Not only will the number of Russian tourists coming to the country reduce, the demand for our tea in Russia has already decreased.
“The Middle Eastern region is in danger because of the ISI terrorists. It has badly affected our tea exports. Also if some incident happens it could affect the world economy and oil distribution.
“The recession in the Chinese economy could also be a disadvantage for us.
“If the European economy weakens it will affect our export earnings. If by some reason Britain leaves the European Union, it could be disadvantageous to us. Therefore we wish that it would not be so.
“The US Federal Reserve could increase interest rates. Once it did it. It has stopped it because it could create problems to the world economy. I think before the US Presidential election they could increase it to show their power. If that is done the interest on the debt we have to pay will also increase.
"For Sri Lanka the year 2016 will be an year which spells utmost diligence given the local and global conditions" the Prime Minister said
He said Sri Lanka should focus on maintaining an economic growth of six per cent and also should show the world that it can overcome any economic storm.
“We can revive this patient and we will revive her even by giving her bitter medicine," he said referring to the country's economy . The prime minister assured that the government would create an atmosphere where the people could lead happy and peaceful lives in the future," the Prime Minister said. (Yohan Perera)
Comments - 50
Lal Tuesday, 08 March 2016 09:13 PM
You do realize that most better countries have 20% VAT
J Palitha Wednesday, 09 March 2016 10:42 AM
If JVP rules our country, we will have a bright future.
Pitha Tuesday, 08 March 2016 09:23 PM
Paying more taxes to leave the debt crisis is worth it. If not we share the same fate of Greece
Upul Tuesday, 08 March 2016 09:27 PM
This is exactly what is happening.
Sapu Tuesday, 08 March 2016 09:58 PM
Please explain how you are going to end the MR debt crisis without taxes
K.senaratne Tuesday, 08 March 2016 10:05 PM
We have to pay 1.2 Trillion rupees as interest this year. We will certainly head to destruction if these loans not payed
Ponnaya Tuesday, 08 March 2016 10:43 PM
These mad old bunch messing up country and pray for IMF to get money to FCID travel expenses for deals
gayan Tuesday, 08 March 2016 10:47 PM
Coz election gimmiks dont work in actual life.
srinath.gunaratne Tuesday, 08 March 2016 11:02 PM
Soon, People will go to the knees of Mahinda to bring him back, Apparently Mahinda was running the economy quite better! Our people as usual, got screwed up by the UNP fairy tales!Currency falling!Credit rating lowered!Well guys how is Yahapalana apple?
Nuwan Tuesday, 08 March 2016 11:36 PM
Only 15% ? Why?. Please increase it to 64.7%. 15% is not enough.
nan Wednesday, 09 March 2016 11:34 AM
Hooray SL -heading for capitalism
Gobba Wednesday, 09 March 2016 11:35 AM
hey stupid, it is Mahinda who created this mess. Are u from Mars ?
fazlul Wednesday, 09 March 2016 11:50 AM
Dear Prime Minister Please read this!Before punishing the people or before taxing the people,Investigate how this much of money is spent, where it isspent and who is responsible and try to recover this money as much as possible from those people!People elected you for this purpose to investigate and to recover the stolen money but not to punish thepeople. I hope you understand this. if not JVP will makeyou understand during the debate!
Lal Wednesday, 09 March 2016 11:57 AM
If MR stayed even a term more then the debt crisis would have been WORSE! Thank Yahapalana for ending the loan taking madness
Lal Wednesday, 09 March 2016 11:58 AM
If Yahapalane didnt come by now we would have already gone bankrupt
suda Wednesday, 09 March 2016 11:59 AM
Do not recover it from people recover it from responsible persons. and reduce the jumbo cabinet
Leelawathie Wednesday, 09 March 2016 12:00 PM
In germany we pay sometimes over 50% - meaning you receive just half of your salary- all others taken as taxes-are to build up and maintain HIghways and everything
Perils Wednesday, 09 March 2016 04:15 AM
Groceries are cheaper in Australia. Come to Australia
Nimal Wednesday, 09 March 2016 04:57 AM
Very true Nagananda. IRD must start witch hunting the landlords 95% do not pay tax on their rental income. Likewise there are so many cash dealings happening - if everyone pays their tax due honestly, I am sure there is not need to introduce new taxes or hike the current tax.
suda Tuesday, 08 March 2016 03:24 PM
Tax tax tax and tax. How the hell are we going to live in SL. Wish to apply for PR and leave this country .
patriot Tuesday, 08 March 2016 03:25 PM
Country is heading for destruction...
Oppa Wednesday, 09 March 2016 06:01 AM
LOL the so called patriot is shouting when govt is trying to stop a debt crisis that could destroy SL. Who created the debt crisis?
Nihal Amarasekera Tuesday, 08 March 2016 03:37 PM
Here it goes...
Medium Pacer Tuesday, 08 March 2016 03:42 PM
What are non-essential commodities ?
Ryan Wednesday, 09 March 2016 06:26 AM
Now this is the way out, biggest mistake was increase government employee salary without any productivity activities
Ryan Wednesday, 09 March 2016 06:30 AM
This government created debt crisis by Rs 10000 salaray increase to govt employees
Man Tuesday, 08 March 2016 04:06 PM
What happened to mansion tax ? Please impose it as well.
Sincere Tuesday, 08 March 2016 04:10 PM
How should we remind the PM that telephone has become an essential part of our daily lives? Will he understand it?
Ceylonese Tuesday, 08 March 2016 04:14 PM
Rajapaksa curse on the citizens of Lanka!
Nagananda Tuesday, 08 March 2016 04:24 PM
This shows the imprudence of the political leadership. Customs, Inland Revenue and Excise do not collect even 30% of the tax they should collect and the billions of revenue is being robbed with full knowledge and connivance of the officials. What required today is not to increase the tax anymore but to install a proper tax collection mechanism.
karthi Tuesday, 08 March 2016 04:28 PM
PM: You came to power to ease the living of the poor people. Any increase in VAT will be passed on to the final consumer. Currently People are finding difficult to meet their expenses on food and medicine.
Sri Lankan Tuesday, 08 March 2016 04:41 PM
We are a nation that borrowed money to fight a brutal war. We obtained loans on inflated project costs and then robbed part of that loan money which is now in Dubai. We are now being told that time has come to settle this money.
Nanju Tuesday, 08 March 2016 04:44 PM
This wont adequate to maintain the jumbo cabinet. As general public we pay all imposed tax but no return...
Sri Lankan Tuesday, 08 March 2016 04:45 PM
First find a country that has no tax collection and then apply.
Sri Lankan Tuesday, 08 March 2016 04:46 PM
You should have realised this long time ago mate...
Dulan Wednesday, 09 March 2016 07:26 AM
They brought in Wealth tax which is better
ANTON Tuesday, 08 March 2016 04:51 PM
A modern statement of Charles Law. When the political force on people is held constant, the number of ministers appointed will be directly proportional to the tax.
Wesko Tuesday, 08 March 2016 04:56 PM
People are suffering for no fault of them. Sir, when will your budget speech end?
BV Tuesday, 08 March 2016 04:57 PM
Why not first of all recover the money looted by the former elite families. In that context you have failed very badly. via DM Android App
voter Tuesday, 08 March 2016 04:57 PM
Taxes related to primary and secondary education should be completely removed.
ANTON Tuesday, 08 March 2016 05:00 PM
Holy shit! Again and again cigarettes and liquor are becoming non-essential commodities.
IND Tuesday, 08 March 2016 05:04 PM
Those are only election slogans.
Ralph Tuesday, 08 March 2016 05:07 PM
In this country the rich do not pay taxes. Wealth is accumulated by the rich and the corrupt through tax evasion and avoidance. What is necessary is not to tax the incomes and expenditure but to tax the wealth and luxurious expenditure. We need Wealth tax and expenditure tax.
Be Fair Tuesday, 08 March 2016 05:11 PM
Paying the "SINS" of a regime gone by. Since independence all politician have drained the country.
Wele Vidane Tuesday, 08 March 2016 05:18 PM
Do you still believe?
Aruna Tuesday, 08 March 2016 05:24 PM
During the war and thereafter while making the infrastructure before 2015 we were not perished like this!
Tax Man Tuesday, 08 March 2016 05:41 PM
Instead of increasing the VAT, why not go after and confiscate all the money robbed during the previous regime?
NZR Tuesday, 08 March 2016 05:42 PM
this is the way of recovery of 1.46trillion which was robbed by former king via DM iOS App
shivaji Tuesday, 08 March 2016 05:44 PM
Well you cant put every screwup by yahapalanaya on MR account.. btw didnt people call RW "naluwek newei molayak".. :) :D
Bandula Tuesday, 08 March 2016 05:51 PM
Dancing to the tune of IMF
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