Sri Lankans protest as government restores old tax regime to deal with crisis

Colombo, Feb 8 (EFE).- Sri Lankan President Ranil Wickremesinghe’s decision to restore the tax regime abolished by his predecessor triggered street protests in the country on Wednesday, with citizens angry at the added tax burden in the severely indebted and impoverished country.

“ Introducing new tax policies is a politically unpopular decision. Remember, I’m not here to be popular. I want to rebuild this nation from the crisis situation it has fallen,” Wickremesinghe told the parliament, even as several groups organized street protests.

The island’s residents had been provided with a tax relief in 2019 by former president Gotabaya Rajapaksa’s government, which reduced the value added tax from 15 percent to 8 percent and withdrew many other taxes.

This, along with other fiscal subsidies, reduced the number of taxpayers from 1.6 million in 2019 to 500,000 in 2021 – out of a population of around 22 million – and resulted in a drop in tax collection, the current government said.

The reintroduction of the tax regime establishes an income-based contribution, which would add around $274 million to the state coffers, the president said.

However, the increase in taxes has been opposed by sections of the society facing the highest financial pressure, as it comes on top of rising living costs, shortage of daily-need products and rationing of basic services and fuel.

Several unions on Wednesday held protests against the new fiscal policy, including the Government Medical Officers’ Association, which announced a 24-hour strike over the measures.

“People are very disappointed in the tax scheme. Everything is expensive in this country and on top of that we are taxed heavily,” a consultant attached to a state hospital told EFE on the condition of anonymity.

The government is trying to stay afloat as it hopes to complete negotiations with the International Monetary Fund for a bailout loan package worth $2.9 billion, with the talks stretching on for months pending final approval by the financial body. EFE

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