JVP-breakaway the Frontline Socialist Party says that their erstwhile colleagues-led NPP Government’s maiden Budget has raised the tax burden per family by Rs 8,200 this year.

Addressing a press conference held at the FSP Headquarters, in Nugegoda, on Monday, the party’s Education Secretary, Pubudu Jagoda, stated that every family will have to pay approximately Rs. 40,000 in taxes when purchasing goods and services this year—an increase of Rs. 8,200 compared to the previous government’s tax burden.

“This government, in its 2025 Budget, has formulated policies favouring large-scale corporations rather than focusing on the general public. This is evident when examining the tax revenue policies. Currently, the government imposes a 30% tax on large-scale corporations. However, no efforts have been made to increase this tax. On the other hand, the tax on individual businesses has been raised from 10% to 15%. Similarly, the tax on small partnerships has also been increased from 10% to 15%. Additionally, the current 10% tax on trustee funds and individual funds has been tripled to 30%. Even the 10% tax on the assets of non-profit welfare organizations has been increased to 30%. Clearly, the entire burden of this Budget is being placed on ordinary people running small businesses, while large-scale corporations are being completely exempted from this burden.

The difference between the income tax revenue of 2024 and the expected income tax revenue of 2025 is a mere Rs. 141 billion. This indicates that the government is not prepared to recover the taxes that were evaded in the past. According to the Parliamentary Procedures and Practices Committee report presented in March 2024, the amount of taxes evaded by large-scale corporations is Rs. 1,068 billion. However, there is no target in this Budget to recover even half of this amount. In 2023, the government provided tax relief of Rs. 978 billion to large corporations. As the Frontline Socialist Party, we proposed to the government to reduce this tax relief and provide some relief to the general public. However, no attention was paid to this.

We are concerned that this Budget has been designed to make it easier for large corporations to evade taxes. The reason for this is that the Budget deficit this year is Rs. 2,200 billion, yet the borrowing limit has been increased to Rs. 4,400 billion. If the Budget deficit is Rs. 2,200 billion, why borrow Rs. 4,400 billion? This is not a small gap but a doubling of the deficit. This shows that the government is already expecting large-scale corporations to evade taxes this year as well. The increase in the borrowing limit is a preliminary step in preparation for this. According to the latest report from the Ministry of Finance, Rs. 966.6 billion in taxes have been evaded from March 2023 to December 2024. This amounts to nearly Rs. 1 trillion.

All these taxes are being evaded by large-scale corporations. Ordinary people cannot evade taxes in this manner. Ordinary people must pay taxes on everything they buy, from a packet of sugar to a bar of soap. In recent times, these corporations have evaded taxes amounting to nearly Rs. 1 trillion. We have seen Minister Lal Kantha stating in Parliament that this is not neoliberalism or socialism but economic democracy. The President claims that this is a people-centric economy. If so, is this government, which calls itself a people-centric or economic democracy, involving the general public more in paying taxes? While allowing large corporations to evade taxes, the Budget is designed to extract taxes from the flesh and blood of ordinary people. According to this government, neither Ranil nor Rajapaksa are neoliberals. Therefore, we urge the government not to misuse the term ‘economic democracy’ in this manner. These terms have historical meanings. What the National People’s Power government is doing is completely contrary to those meanings.

This year, taxes on goods and services have increased by 25.94%. In 2024, the tax revenue from goods and services was Rs. 2,201 billion. This year, it is expected to increase to Rs. 2,772 billion. If this amount is divided among the 5.8 million families in Sri Lanka, each family paid Rs. 31,623 in taxes last year. This year, each family is expected to pay Rs. 39,817 per month in taxes. Due to this Budget, the average tax amount a family has to pay per month has increased by Rs. 8,200 compared to last year. This means that living this year will be more difficult than last year. According to the Department of Census and Statistics, the average monthly expenditure of a family is Rs. 78,000. Looking at it this way, Rs. 40,000 of this will have to be paid to the government as taxes. How much will be left for people to meet their daily needs? Whether buying medicine or a pen for a child going to school, a large tax must be paid. The government has not removed the VAT on educational and medical equipment. This is unbearable for the people,” Jagoda said.