Sri Lanka’s rich should pay wealth tax, says Prime Minister
Sri Lanka’s poor are paying most of the taxes in the country compared to the rich who contribute far less, Prime Minister Ranil Wickremesinghe said this week. Speaking at the launch of a World Bank study in Colombo, he said that 80 per cent of the taxes were paid by the poor in the country while the rich only paid 20 per cent of the taxes. “My thinking was that imposing a tax on those who possessed wealth was needed,” he said. Referring to poverty in the country, he said the poorer segments of the population were found in rural areas.
However to overcome poverty in the cities, opportunities have to be created for persons to receive a good education for them to find suitable employment. Rural farmers have to be provided with capital instead of subsidies for them to prosper. “We have deployed several officials in the villages to develop the economy. We have to provide farmers with capital.” The Prime Minister was addressing the Word Bank Group meeting held at the Ape Gama “Jana Kala Kendraya”, Battaramulla Kotte recently under the theme “Sri Lanka Ending Poverty and Promoting Shared Prosperity”.
He said the World Bank is assisting the government’s effort to double the GDP by 2025 the latest and to become a high income country within a decade after that. “We are looking at core areas such as inflation and reducing poverty. These are the targets of the World Bank,” he said. He said the government is planning to provide permanent title deeds and houses to people who occupy state land. The Prime Minister said in 1949 Sri Lanka (then Ceylon) was a leading nation although Japan had far more potential but lost it during the Second World War, but they knew to re- deploy that potential. “But where is Sri Lanka?” he queried.
“President Maithripala Sirisena has got the mandate from the people to form a government and we have formed a national government to go ahead and deliver goods to the people.” He said that there were had been many programmes to end poverty and for rural development programmes with a large bureaucracy. “Are we effective by just giving money to the poor?” he asked. The Premier said the country has to move from the South Asian mentality and look at the East Asian model such as manufacturing, developing IT technology and promoting tourism to develop the rural economy. “We have to modernise the rural economy. Are the present programmes really effective?” he asked.
David Newhouse, a Senior Economist of the World Bank presenting the Sri Lanka Poverty Assessment, said Sri Lanka faces challenges in terms of in low living standards and pockets of serious poverty in some areas in the country. He said due to urbanisation people are moving out from rural agricultural areas to services and industry employment in urban areas. “We see all over the world agriculture as the least productive employment. When people move out of the agricultural sector into industry and service sector they increase productivity and earn more.”
The World Bank Group report meanwhile said that around 40 per cent of the population survives on less than twice the poverty line which was US$ 2.75 per capita in 2005 or Rs. 225 rupees per day.
The population in the Northern and Eastern provinces is particularly disadvantaged in terms of consumption, labour market outcomes , educational attainments and housing conditions while inequality increased sharply from 2009-10 to 2012-13. Professor of Economics of the Department of Economics and Statistics of the University of Peradeniya, Dileni Gunewardena said that according to the World Bank report, the poverty rate was high in the Northern and the Eastern Provinces. Other than in the north and the east, the Central Province, the Sabaragamuwa and in the Uva Province especially in the estate sector there are a large number of poor people, she said.