January 25, 2023, Colombo: Government spokesman Minister Bandula Gunawardana said yesterday that the IMF had instructed the Sri Lankan government to tax all who draw a salary or a monthly income of over Rs 45,000, but the government has yet to accept this proposal.
Gunawardena said the government would maintain its policy of imposing taxes only on those who earn a monthly income of Rs.100,000. Gunawardena said President Ranil Wickremesinghe had revealed this IMF proposal to the cabinet on Monday.
“I disclose this to you to explain the government’s daily difficulties. The simple theory is that our expenditure is more than double our income. But we must import essential food commodities, drugs, oil and gas, and raw material for the industry notwithstanding our severe financial constraints. The banks do not release our loans and do not open letters of credit to settle import bills as we have declared bankruptcy and defaulted on loan payments. All state functions like payment of salaries of public servants and pensions, payments for food imports, oil and coal payments and loan interests are done after collecting tax revenue daily. The situation in the country is so grave,” Gunawardana said, addressing the weekly post-cabinet news briefing.
He explained the Ceylon Electricity Board (CEB) faces an expenditure of Rs. 5 billion to supply uninterrupted power during the GCE A/L examination from January 23 to February 17, but the government power monopoly needs to absorb this loss.
As such, the CEB, with the approval of the PUCSL, will restrict the power cut to 2 hours from the current 2 hours and 20 minutes. The CEB’s monthly income was Rs. 35 billion in January, and it needs Rs. 38 billion to purchase oil alone.
Under these circumstances, the government is not in a position to increase the ceiling of taxable monthly income or salaries of private and public sector employees, Gunawardana said.
