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FSP urges NPP MPs to reject unfair tax policies

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Pubudu Jagoda

The Frontline Socialist Party (FSP) has sent a letter to all MPs of the ruling National People’s Power (NPP) government, urging them to reject what it describes as a severely unfair tax policy outlined in the 2025 Budget. The party has warned that the proposed tax structure will place an unbearable burden on the public, while at the same time granting significant concessions to large corporations and wealthy individuals.

The 2025 Budget, which was presented to Parliament on 17 February, is scheduled for a final decision on 21 March. The FSP stated that tax policies were generally designed to reduce economic inequalities, prioritise economic development, and regulate market consumption patterns. It argued that the 2025 Budget approached taxation solely as a means of generating government revenue, disregarding the economic hardships faced by the majority of the population.

The FSP has raised concerns over the significant increase in Value Added Tax (VAT) on goods and services, which is set to rise by 25.94% in 2025. The government aims to increase tax revenue from Rs. 2,201 billion in 2024 to Rs. 2,772 billion in 2025, resulting in a notable rise in the financial burden on ordinary citizens. According to the FSP’s analysis, this means that in 2024, an average Sri Lankan household paid Rs. 31,623 per month in indirect taxes on goods and services. In 2025, this figure is expected to increase to Rs. 39,817 per month, placing an additional Rs. 4,200 in taxes on each household. The party argued that this increase is unbearable for families already struggling under the weight of the economic crisis.

Citing data from the Department of Census and Statistics, the FSP has highlighted that the average monthly household income in Sri Lanka is Rs. 76,414, while monthly expenses amount to Rs. 63,130. It has warned that nearly two-thirds of a family’s monthly spending would now be consumed by taxes, describing this as a severe economic blow to working-class and lower-income groups. The party accused the government of betraying the expectations of the people who placed their trust in the NPP administration.

While the government has defended its decision by claiming that the higher VAT collection is not the result of introducing new taxes, but rather improving tax enforcement, the FSP dismissed this argument as misleading. It pointed to the Ministry of Finance’s own report, which stated that between 2023 and 2024, businesses collected Rs. 333.1 billion in taxes from consumers but failed to remit them to the state. Despite this massive tax evasion by corporations, the 2025 Budget does not prioritise recovering these unpaid revenues or strengthening direct taxation on high-income earners. Instead, the government has doubled the withholding tax on savings from 5% to 10%, imposed a 15% tax on foreign income earned through online services, and extended import duties on 63 essential goods, including food items, from 1 January 2025.

The FSP also criticised the government’s handling of VAT rates, which have been rising continuously since 2022. The VAT rate, which was 8% in early 2022, was increased to 12% in August 2022, then raised to 15% in January 2023, and further increased to 18% in January 2024. The party warned that the government appears to be following a pattern of gradually increasing VAT, making it even more difficult for ordinary people to afford basic goods and services. Additionally, a Social Security Contribution Tax was introduced in 2023, further exacerbating financial pressures on the public.

Beyond the tax hikes on ordinary citizens, the FSP condemned the favourable treatment given to wealthy individuals and large corporations. It cited a Parliamentary Committee on Public Accounts (COPA) report from March 2024, which revealed that large corporations evaded Rs. 1,068 billion in taxes, while domestic and foreign corporate entities received tax concessions worth Rs. 978 billion. Despite these staggering figures, the government has only planned to increase direct tax revenue by Rs. 141 billion, indicating that it has no real intention of recovering unpaid taxes from the country’s largest businesses.

The FSP also highlighted a controversial clause in the 2025 Budget that offers a six-month amnesty period for overdue tax payments. This clause, buried in the technical section (Clause 1.9) of the budget document—which was only released in English—states that businesses that failed to pay taxes between 2022 and 2023 can settle their dues without facing penalties or interest charges. The party described this as a shameful giveaway to tax-evading corporations, arguing that it directly undermines the government’s claims of enforcing tax compliance.

In its letter to MPs, the FSP urged lawmakers to reject the tax policy and stand against what it called a blatant betrayal of the public interest. The party reminded Parliamentarians that Sri Lanka’s economic crisis, IMF-imposed financial restructuring, and rising inflation have already pushed millions into financial hardship, and that imposing additional tax burdens on struggling families would only deepen the crisis.

The FSP warned that if MPs vote to approve these unfair tax measures, they risk facing public outrage and a loss of trust. It called for an immediate revision of the 2025 Budget’s tax policy, urging the government to shift the tax burden away from ordinary citizens and onto the country’s wealthiest individuals and corporations.



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Diesel replacement costs up to Rs. 4.5 bn in April

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Norochcholai Power Plant

Coal power generation falls by 27 GWh

A sharp decline in coal-fired electricity generation in April 2026, compared to the corresponding month last year, may have cost Sri Lanka more than Rs. 4.5 billion, as the country was compelled to rely on significantly more expensive diesel-powered generation to make up the shortfall, according to power sector data.

The coal-based electricity generation, in April 2026, was 27 GWh lower than in April 2025, a development that has sparked concern among energy experts and economists over the mounting financial burden on the country’s already strained power sector.

Industry calculations reveal that generating the lost 27 GWh through diesel-fired power plants would require approximately 8.1 million litres of fuel, based on a standard consumption rate of 0.3 litres per kilowatt-hour.

With fuel costs estimated at around USD 286 per barrel, or roughly USD 1.80 per litre, the replacement power would have cost approximately USD 14.57 million. At the prevailing exchange rate of about Rs. 315 to the US dollar, the bill exceeds Rs. 4.5 billion for April alone.

Energy sector analysts say the figure highlights the enormous economic value of maintaining high availability at coal-fired power plants, particularly at a time when Sri Lanka is seeking to reduce electricity costs and strengthen energy security.

“The financial impact of losing low-cost coal generation is substantial. Every unit not generated by coal has to be replaced by a much more expensive source, usually diesel or fuel oil, which ultimately affects the finances of the power sector and the wider economy,” a senior energy analyst said.

Even under a more conservative calculation, based on the average electricity generation cost of around Rs. 72 per unit recorded in 2025, the loss remains significant. The 27 million units not generated from coal would translate into an additional cost burden of nearly Rs. 2 billion.

The decline in coal generation comes at a critical juncture for Sri Lanka’s energy sector.

 The government has repeatedly emphasised the need to maintain affordable electricity tariffs, while reducing dependence on imported fossil fuels and expanding renewable energy capacity.

Experts warn that any sustained reduction in low-cost baseload generation could undermine these objectives, increasing the need for costly thermal power and placing additional pressure on foreign exchange reserves.

The latest figures are expected to intensify scrutiny of generation planning, fuel procurement strategies and the operational performance of major power plants. They also underscore the importance of ensuring uninterrupted operation of coal-fired facilities until sufficient renewable and storage capacity is available to replace them reliably.

With the country striving to maintain economic stability and energy affordability, analysts argue that avoiding such generation shortfalls must remain a top priority for policymakers and power sector planners.

By Ifham Nizam

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Sallay on hunger strike: Counsel warns CID

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Sallay

Asith Siriwardena Counsel for former Director of State Intelligence Service, Major General (Retd.) Suresh Sallay, detained under the Prevention of Terrorism Act (PTA) over the 2019 Easter Sunday attacks, has called upion the Director of the CID, SSP G. S. Abeysekara, to transfer his client either to a private or government hospital to receive urgently needed teatment.

Sallay was on a hunger strike, claiming mistreatment by the CID, his wife said, after visting him, yesterday.

Siriwardena wrote to the CID Director yesterday (07) after Sallay was visited by his wife, son and brother.

The text of the letter: “The family observed that Mr. Sallay’s physical condition has deteriorated to an alarming and critical level.

“He is reportedly unable to attend the visitation without the physical assistance of two officers. During the visit, he informed his family that he had refused medication, saline, food, and water. He further expressed a belief that his death is imminent and requested that arrangements be made for the donation of his eyes. He also requested an immediate visit from his Attorney for the purpose of executing his last will and other related legal documentation.

“These statements, and circumstances, demonstrate a grave deterioration in his physical and psychological condition. It is apparent that he is no longer capable of making rational decisions concerning his own welfare, health, and survival.

The prolonged conditions, under which he is presently being held have, at the very least, created a serious and immediate risk to his life.

“The State assumes a non-delegable duty of care toward every person held in its custody. Once an individual is deprived of liberty, the responsibility for safeguarding that person’s life, health, and wellbeing rests squarely upon the authorities exercising control over that individual. Any failure to discharge that duty in the face of a known and imminent medical emergency is a matter of the utmost legal seriousness.

“You are hereby formally notified that Mr. Sallay requires immediate medical intervention by qualified independent medical professionals and urgent transfer to an appropriate hospital facility capable of providing comprehensive assessment and treatment. Any delay, refusal, or failure to act despite clear knowledge of his precarious condition may give rise to personal and institutional liability under the criminal and civil law of Sri Lanka

“Should General Sallay suffer irreversible injury or death while remaining in the present conditions despite this explicit warning, it will be open to the relevant authorities, courts, and investigative bodies to examine whether such conduct amounts to a deliberate disregard of a known and foreseeable risk to life. Those responsible for decisions concerning his continued detention and medical care may be required to account personally for their actions and omissions.

“Accordingly, I demand that:

1. Mr. Sallay be transferred forthwith to a government or private hospital equipped to provide urgent medical treatment;

2. He be examined immediately by independent medical specialists, including psychiatric professionals if necessary; His legal representatives and family be granted reasonable access to him;

3. A written update on his medical status and the measures taken for his protection be provided without delay. This letter constitutes formal notice. Any further failure to act despite knowledge of the circumstances set out herein will be relied upon in any future judicial, criminal, constitutional, or international proceedings arising from harm suffered by my client.”

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Opp. questions why Rs 10 bn meant for Ditwah victims held in Treasury account

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Sanjeewa

The Opposition says the NPP government should explain why the funds received by Rebuilding Sri Lanka haven’t been utilised to provide relief to those affected by Ditwah cyclone in late November last year.

The failure on the part of the government to utilise as much as Rs 10 bn, received from local and foreign donors, came to light when the National Audit Office (NAO) appeared before the Public Finance Commission recently.

The NAO told the House Committee that no statutory fund currently existed under the name “Rebuilding Sri Lanka” and the programme operated through an account maintained under the Deputy Secretary to the Treasury.

The NAO declared that no payments had been made through this account to date.

Former SLPP MP Sanjeewa Edirimanne said that until the disclosure made by the NAO the country had been led to believe the Rebuilding Sri Lanka fund provided post-Ditwah relief. Pointing out that JVP General Secretary Tilvin Silva’s declaration in Jaffna that funds allocated to hold Provincial Council polls

had been utilised to assist Ditwah victims, Edirimanne said such blatant lies were propagated while the government held on to Rs 10 bn meant for the disaster victims.SJB MP Mujibur Rahman questioned the rationale behind keeping funds received specifically for Ditwah victims still living under extremely difficult conditions. (SF)

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