Connect with us

Business

Cure could be worse than the disease says company director

Published

3 years ago

on

Chaminda Wanigaratne

New Tax Structure

By Sanath Nanayakkare

A new tax policy is a timely need for Sri Lanka, but the government should be careful not to throw the baby out with the bath water, because then, the cure would be worse than the disease, Chaminda Wanigaratne – Director Automotive at Ideal Motors (Pvt) Ltd. told The Island Financial Review.

‘Raising high levels of revenue from an anti-industrial tax policy may be the easiest way to pay the salaries of government servants, state-sector pensions, meet huge loan and interest payment liabilities payable by the government, and also to keep the loss making state-owned-enterprises (SOEs) flying their flag above the water. But the government should evaluate the repercussions of this move before it backfires,” he said.

“The government of Gotabaya Rajapaksa gave effect to substantial tax cuts without a mandate from the people, and we all know the repercussions it brought to the country at large. Now the current administration’s policy decisions led by President Ranil Wickremasinghe are going to give effect to historically-high corporate and personal income taxes of which the repercussions are going to be grave on the industrial sector and thereby on the overall economy ,” he says.

He further said::

“If the new tax bill is passed in parliament, it will definitely discourage export-oriented companies and companies that are engaged in the production of import substitutions. In addition to that, it will no doubt discourage the country’s top talent in the fields of manufacturing, technological, finance, marketing, sales, innovation etc. This scenario will create a pervading effect of dismay and disappointment among local manufacturers, business owners, shareholders, C-suite personnel and middle level executives who are collectively the driving force behind the private sector, which is undoubtedly the engine of growth.”

“We are not saying that taxes shouldn’t be levied. In this country, we need to have a minimum of 15% tax to GDP ratio because Sri Lanka doesn’t have alternative earnings. But it should be levied in a strategic and meaningful way. It should be fair by the people and the society. Further, taxes collected should be well spent to improve education, healthcare, infrastructure, power and energy sector etc. But we don’t hear anything from the government whether it is going to use the tax funds for such purposes.”

“It’s clear that the government’s bull’s eye target is raising revenue to meet public expenditure at any cost. They want to have a surplus in the primary account as in 2018-2019 and show the IMF impressive numbers in the balance of payments and budget deficit. In my view, this is just not feasible in the medium to long term in an environment of high inflation, high interest rates and ultra-low growth. Levying corporate taxes of 30%-36% and personal income taxes from 6%-30% would be like robbing Peter to pay Paul. What the government should do is not transferring money from the well-managed corporate sector to the ailing public sector possibly allowing both sectors to collapse. Instead they should make public institutions more efficient and productive by making reforms such as retrenchment and reallocating existing human resources appropriately, and cutting back expenses. Placing the whole burden of loss-making SOEs such as CPC, CEB, SriLankan Airlines, CGR, CTB etc., on the private sector is a shortsighted strategy. Even if the corporates and salaried personnel pay high taxes, it won’t make our lot better. One-third of the potential tax collections will be consumed by public sector salaries, another one-third will be used to pay interest on the loans the government has taken. And the balance one-third will be channeled to fund the reeling SOEs. Not a single tax rupee is likely to be allocated for the wellbeing of the people. So, we will end up paying high taxes like in Scandinavian countries or Europe and live like poor people in North Korea. Instead of becoming another North Korea, we should take a lesson from what India did in 1990s when it encountered a similar crisis. India made the right policies at the right time boldly, and turned it into an industrial country. They established all kinds of technology manufacturing in India and the country today is a leading manufacturing hub for automobiles and automotive components in the world.”

“But unfortunately, here in Sri Lanka we don’t see such policies being conceptualized by the Government or the Central Bank or the Treasury.”

Talking about repercussions of the new tax policy he said, “With high tax rates, dollar-earning ICT sector companies that operate online, may obtain overseas business licenses, and instead of operating from Sri Lanka, they will base their stations in Dubai or Singapore. Changing online operational platforms is a matter of hours for these companies. Then their real business jurisdiction will be one of those countries and will pay taxes to those countries depriving Sri Lanka of any taxes at all. Further, export-oriented manufacturers will find the trading sector more lucrative and they too will convert into trading because the prevailing operational conditions are biased towards trading companies such as supermarket chains and fast-food chains and not import substitution companies. The high personal income taxes will affect our private sector talent pool from middle managers to cluster heads to directors. They have a lifestyle which they have not deliberately embraced but one that circumstances have compelled them to accept. Because of the nature of their jobs, they have enrolled their children in private schools, bought houses in close proximity to Colombo, maintain a car as they need their own transportation. All these mean many financial commitments at the end of each month; therefore, they can hardly take this unexpected tax hit. These skilled young people will have no other option but migrate to other countries where personal income taxes are fair and living conditions are much higher. Thus no-one with professional career prospects would want to stay in Sri Lanka. A confluence of all these will lead to even weaker external sector performance by Sri Lanka in the months ahead making the current situation bleaker.”

“So we should all unite and raise our voices to prevent this tax bill from getting passed in parliament, or otherwise, a second Aragalaya will soon ensue from the widespread frustrations triggered by this unfair tax structure,” he said.


Related Topics:
Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

Hour of reckoning comes for SL’s power sector

Published

15 hours ago

on

2026/04/1

By

Eng. Pubudu Niroshan

By Ifham Nizam

A long-delayed reckoning in Sri Lanka’s power sector is finally beginning to take shape—driven less by choice and more by necessity.

At a time when the country’s fragile economic recovery hinges on stability, the electricity sector—long plagued by inefficiency, political interference, and costly dependence on imported fuel—has re-emerged as both a risk and an opportunity.

It is within this context that The Institution of Engineers, Sri Lanka will host a timely and potentially consequential forum on April 2 at the Wimalasurendra Auditorium, focusing on a “Pragmatic Approach to Electricity Sector Reforms in Sri Lanka and the Way Forward.”

This is not just another technical discussion. It is, in many respects, a reality check.

The keynote address by Eng. Pubudu Niroshan—who stood at the centre of recent reform efforts as Director General of the Power Sector Reforms Secretariat—comes at a moment when the gap between policy ambition and execution has become impossible to ignore.

For over three decades, Sri Lanka has spoken the language of reform. Yet, time and again, progress has been derailed by institutional resistance, political hesitation, and an entrenched reluctance to dismantle inefficient structures.

The result is a sector that continues to bleed financially while passing the burden onto consumers and the broader economy.

High electricity tariffs, supply vulnerabilities, and operational inefficiencies are no longer isolated technical issues—they are macroeconomic threats. Industries struggle to remain competitive, investors remain cautious, and households continue to bear rising costs. The over-reliance on imported fossil fuels has only deepened this vulnerability, exposing the country to global price shocks and geopolitical disruptions.

The economic crisis of 2022 briefly forced a shift in thinking. Under severe fiscal pressure, reform was no longer optional. The passage of the Sri Lanka Electricity Act, No. 36 of 2024 was seen as a breakthrough—an acknowledgment that structural change could no longer be postponed.

But legislation alone does not transform systems.

What has followed is a more grounded, outcome-driven approach—one that attempts to move beyond policy rhetoric. Within a relatively short span, the first phase of restructuring has been pushed through, including the repeal of the decades-old CEB Act, No. 17 of 1969, and the unbundling of the monolithic utility into six state-owned entities.

This is, by any measure, a significant structural shift.

Yet, the real test lies ahead.

Unbundling without genuine market discipline risks becoming another cosmetic exercise.

The promise of a competitive National Electricity Market—long discussed but never realized—will depend heavily on regulatory strength, transparency, and political consistency. Without these, the same inefficiencies could simply be replicated across multiple entities.

Moreover, reform cannot succeed in isolation.

Sri Lanka’s energy transition must be anchored in a broader economic strategy—one that aligns power sector reforms with industrial growth, environmental sustainability, and investment policy.

The proposed “Energy Transition Act,” now under consideration, will be a critical piece of this puzzle. If executed with clarity and discipline, it could provide the legal backbone for a coherent and forward-looking energy framework.

The reference to an Integrated Economic Development Framework (IEDF) in the 2026 Budget underscores this necessity. Energy is not a standalone sector—it is the foundation upon which economic recovery will either stand or falter.

What makes this moment different is the absence of alternatives.

Sri Lanka can no longer afford half-measures or delayed decisions. The cost of inaction is too high, and the margin for error too narrow. Reform, in this sense, is no longer a policy preference—it is an economic imperative.

The upcoming forum at The Institution of Engineers, Sri Lanka is therefore more than a professEng. Pubudu Niroshanional gathering. It is a critical platform where technical expertise must confront political reality, and where long-standing assumptions must be challenged.

For years, Sri Lanka’s electricity sector has been caught in a cycle of discussion without delivery. The shift toward a pragmatic approach signals an understanding that outcomes—not intentions—will define success.

The question now is whether that realization will finally translate into sustained, irreversible change.

Because this time, failure is not just an option—it is a risk the country simply cannot afford.

Continue Reading

Business

Dialog introduces Samsung Galaxy S26 Series with AI-powered camera and 5G Connectivity

Published

15 hours ago

on

2026/04/1

By

From left to right: Shiromy Ali, Assistant Vice President, Group Corporate Planning & Strategy, Dialog Axiata PLC; Hemaka Balasooriya, Chief of Dialog Business Services, Dialog Axiata PLC;  Shanaka Fernando, First Pre-order Customer; Sang Hwa Song, Managing Director, Samsung

Dialog Axiata PLC, Sri Lanka’s #1 connectivity provider, announced the availability of the Samsung Galaxy S26 Series in Sri Lanka through its retail and digital channels, bringing Samsung’s latest flagship smartphone lineup to local consumers. The series includes the Galaxy S26, Galaxy S26+, and Galaxy S26 Ultra, combining advanced AI-powered capabilities, premium design and next-generation connectivity for everyday mobile use, with customers able to experience the power of Dialog 5G Ultra on the devices.

The Samsung Galaxy S26 Series introduces an AI-powered camera system featuring a 200MP AI-enhanced rear camera with improved low-light performance, advanced zoom and intelligent editing tools for capturing and refining content directly on the device. The lineup also includes Galaxy AI capabilities, a privacy display that limits viewing angles to protect on-screen information, and steady video functionality for smoother and more stable video recording.

The Galaxy S26 Series features Dynamic AMOLED displays across the lineup, including a 6.3-inch Galaxy S26, 6.7-inch Galaxy S26+, and 6.9-inch Galaxy S26 Ultra, supporting smooth performance for streaming, gaming and everyday productivity. The devices are available with 12GB RAM and storage options of 256GB or 512GB, while the Galaxy S26 Ultra also offers a 16GB RAM variant with up to 1TB storage for users requiring additional capacity.

Continue Reading

Business

Ideal Motors celebrates gala ‘Excellence Awards’ honouring outstanding performance

Published

15 hours ago

on

2026/04/1

By

The Mahindra Ideal Excellence Awards ceremony, a grand celebration to recognize dealers and other stakeholders of Ideal Motors, was held at the Wave n’ Lake Banquet Hall & Restaurant in Welisara recently.

The event was graced by the presence of special guests including Nalin Welgama, Founder and Chairman Ideal Motors, Dilani Yatawaka, Group Managing Director/CEO Ideal Motors, Nimisha Welgama, Director Legal and Corporate Affairs Ideal Motors, Sachin Arolkar, Head International Operations, Auto Division Mahindra & Mahindra India. Senthil Selvaraju, Head International Operations and Customer Service Automotive Division Mahindra & Mahindra India, Sujeeth Jayant, Country Head Mahindra & Mahindra India and Shitam Kundu, Head Domestic Services Mahindra & Mahindra India.

Also, in attendance from Ideal Motors were Kasun Fernando, General Manager Commercial Vehicle Sales Division, Sameera Bamunuarachchi, Deputy General Manager Spare Parts, Logistics & Inventory and Prasanna Manamperi, Deputy General Manager After Seles Service.

The Excellence Awards ceremony honoured the top sales dealers at the provincial and national levels. Recipients were presented with awards, certificates of merit, and cash prizes in recognition of their achievements. The three best national‑level sales dealers from the various categories were further rewarded with an opportunity to visit Bangkok, Thailand. In addition, special recognition was extended to banks and financial institutions that partner with Ideal Motors.

Speaking at the event, Nalin Welgama Ideal Motors Founder and Chairman said, “When we began our journey with Mahindra in 2009, the previous company had sold 300 vehicles in the country, of which nearly 150 had various defects. At that time our journey began by engaging with the parent company in India and repairing those vehicles free of charge. That commitment has brought us to where we are today. As we believe, our journey truly begins after the sale. We are dedicated to strengthening our customers, and in doing so, strengthening ourselves. That is how we transformed the after‑sales service experience.”

Continue Reading

Trending