COLOMBO – Sri Lanka opposition leader Sajith Premadasa has proposed that, before increasing taxes on dollar-earning sectors, the government “take the dollars back” from the rupee-millionaires who became dollar-millionaires after the 2019 tax cuts.

Speaking at a discussion in Tissamaharama in the deep South on Tuesday (25) with local safari jeep drivers and others in the tourism trade, Premadasa said Sri Lanka’s prevailing currency crisis is not something that can be resolved by putting pressure on the economy.

There is a definite need for a growth strategy, he said.

Sri Lanka’s central bank has raised interest rates to keep runaway inflation at bay, after two years of excess money printing to keep rates down and boost growth. The country is now going through its worst currency crisis in decades.

“My proposal is to not tax the avenues through which dollars enter [the economy]. Do not increase taxes for IT, or for tourism,” Premadasa urged.

The government is complaining that they have no dollars, the Samagi Jana Balawegaya (SJB) leader said, calling for stimulus be provided to places that bring in dollars. “They must be encouraged,” he said, referring to apparel and other export industries, which he said should be given “maximum support”.

While doing this, the government must raise taxes on the multi-millionaires who benefited from the 2019 cuts, which eroded government revenue, contributing to the present crisis, Premadasa said noting, “The tax cuts turned rupee millionaires to dollar millionaires”.

He called on the government to catch these thieves and take back their stolen dollars before imposing more taxes. “Then we can tax much less. That money can be added to government revenue,” he pointed out.

Sri Lanka’s newly gazetted tax regime, which saw a significant spike in personal income tax, was met with opposition by political parties and some professionals, while others expressed support.

President Ranil Wickremesinghe has said the government will likely go ahead with the new income tax despite opposition though the government is “ready to discuss” it.

“We have to take certain decisions reluctantly. However, we will reconsider these decisions periodically,” Wickremesinghe assured in a televised address to the nation on October 19.

“The government is ready to discuss this further,” he added.

Justice Minister Wijeyadasa Rajapakshe earlier that week said the president, cabinet of ministers and opposition groups will all be part of discussions the government expects to hold on the best possible taxation system going forward.

-economynext.com