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‘Super-rich’ tax in the budget
Sri Lanka’s ‘super-rich’ are in for an unpleasant surprise next month. The Government is considering the introduction of an additional tax on wealthy Sri Lankans in the 2014 budget to be presented on November 21. An official source told the Sunday Times the annual income and assets of wealthy Sri Lankans would be taken into account in establishing a new tax category for the so-called ‘super-rich’.
This tax would be in addition to other normally levied taxes they were now paying, he said. The threshold of income for levying the higher tax rate is being worked out. The tax, once approved, would apply to both those who have acquired wealth through inheritance of family property and cash, and the new-rich, a growing breed of businesspersons who have acquired wealth in recent times.
The proposal to impose an additional tax on the wealthy, once finalised, would be presented to the President who is also the Finance Minister, for his endorsement before it is cleared for presentation in the budget, the source said.
The Government would clearly define the category of taxpayers on whom the proposed tax is to be imposed, he disclosed.
This development is also aimed at focusing attention on strengthening tax administration to bring in unaccounted for money into the tax net.
In other budgetary measures, proposals are being considered to promote import substitution and curbing unnecessary imports through increasing import duty and introducing new taxes, according to a highly-placed government official.
The Special Commodity Levy, one of the taxes imposed on importers, is to be raised to increase revenue. Economists say this move would eventually lead to increased prices of essential commodities such as sugar, potatoes, milk powder and big onions.
Another measure being considered is enforcing a single rate for Value Added Tax (VAT) compared to different rates for products being imported. The source said the intention here was to improve the management of VAT which was cumbersome now with different rates, while revenue would also rise under a single rate.
Special concessions would be provided for dairy and leather product industries as well as small and medium scale enterprises to encourage local industries and reduce import cost, he added. Tax relief would be provided to exporters amid a slowdown in exports to Europe which was facing a financial crisis.
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