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Sajith claims VAT hike will shrink economy

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ECONOMYNEXT –Opposition and SJB leader Sajith Premadasa has accused the government of shrinking the economy through its proposal to increase value added tax (VAT) to 18 percent, claiming that it will reduce spending and investments.

Speaking at an event on Friday November 03, Premadasa said Sri Lanka is experiencing a shortage in both dollars and rupees.

“This is a problem. But it can be resolved through economic growth, not through economic shrinkage,” he said.

“This government is shrinking the economy. By increasing VAT, they’re trying to pickpocket the pittance in your hand,” claimed Premadasa.

The increase in VAT, he said, will result in a reduction in spending and investments as people will have less money to spend.

“A country cannot succeed by shrinking the economy. The economy must be grown,” he reiterated, claiming that a future government headed by the main opposition party the Samagi Jana Balawegaya (SJB) will bring about an “era of productivity and exports”.

Earlier in the week, during a discussion with university lecturers on Wednesday November 01, Premadasa claimed that the proposal to increase VAT by 18 percent in 2024 was a distortion of Sri Lanka’s tax formula.

President Ranil Wickremesinghe, meanwhile, defended the proposed VAT hike, amid confusion over how Sri Lanka plans to finance a proposed salary increase for state sector workers in the face of an ambitious 2.3-percent primary surplus target.

Speaking at the National Industry Excellence Awards 2023 on Wednesday, Wickremesinghe acknowledged that the decision to increase VAT was a challenging one, driven by the “need to maintain economic stability”.

The public, particularly the working and underprivileged classes, will have to bear the burden of this “regressive” tax hike, he said.The salary hike for state sector workers is to be proposed in the upcoming budget for 2024, with President Wickremesinghe also promising to request the private sector to increase salaries of employees following an unprecedented rise in commodity prices due to inflation triggered by 2022’s currency crisis.

There is also an ongoing campaign of agitation by state sector unions demanding a 20,000-rupee salary increase. Government spokespersons have not provided specifics on the salary increased that will be proposed in the budget.

Sri Lanka’s deal with the International Monetary Fund (IMF) includes an agreement to achieve a primary surplus of 2.3 percent of the gross domestic product (GDP) by 2025.

It is against this backdrop that President Wickremesinghe’s administration has increased personal income tax and now also plans to hike VAT by a significant margin, despite protests from unions and increased levels of migration.



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Flood warning issued to the Aththanagalu Oya basin extended until 0600AM on Monday [25]

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The warning mentioned in the flood warning message No. 01 issued for the Aththanagalu Oya basin on 22.05.2026 at about 5.30 am will be extended for the next 48 hours.

It is requested that residents in the area and vehicle drivers running through those areas  pay high attention in this regard by the . Disaster Management Authorities are requested to take adequate precautions in this regard

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Torrential rains cause havoc countrywide

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Heavy and persistent rains lashed several parts of Sri Lanka yesterday, triggering flooding, transport disruptions, flight diversions and multiple disaster warnings as water levels rose in key river basins and low-lying urban areas.

The worst affected situation was reported along the Colombo–Avissawella main road, where floodwaters submerged sections of the highway, bringing vehicular movement to a standstill at several points, including the Puwakpitiya-Thummodara junction, the Seethawaka Botanical Garden area, and parts of Yatiyantota. Traffic was also severely disrupted along the Delgoda–Belumahara road at Udupila, and the Gampaha–Miriswatta road, due to inundation, while movement on the Divulapitiya–Mirigama route was restricted for light vehicles, following flooding at Ullalapitiya.

In the Kelani River Valley, rising water levels, following heavy rainfall in the catchment areas, prompted warnings of possible minor flooding within the next 48 hours. The Irrigation Department cautioned that areas, including Hanwella, Seethawaka, Dompe, Padukka, Homagama, Biyagama, Kaduwela, Kolonnawa, Kelaniya, Wattala and Colombo, could be affected. The flood alert, issued at 10:00 am yesterday, remains valid for 48 hours, until Sunday morning.

Meanwhile, the National Building Research Organisation (NBRO) issued landslide warnings covering six districts—Colombo, Gampaha, Kalutara, Kegalle, Nuwara Eliya and Ratnapura. Red alerts were issued for Dehiowita, in Kegalle and Ratnapura, while amber and yellow warnings were declared for several vulnerable divisions, including Seethawaka, Padukka, Attanagalla, Ingiriya, Bulathsinhala, Ruwanwella, Kuruwita, Ayagama, Pelmadulla, Yatiyantota, Ambagamuwa, Eheliyagoda, Nivithigala and Kalawana.

In the civil aviation sector, poor visibility and heavy rain around Katunayake forced the diversion of around six inbound flights, bound for Bandaranaike International Airport (BIA), to Mattala Rajapaksa International Airport, as a precautionary measure.

The Department of Meteorology reported that the highest rainfall recorded was 336.5 mm in Pambegama, Kegalle, between Thursday morning and Friday morning, underscoring the intensity of the ongoing weather system.

Authorities have urged the public, in affected districts, to remain vigilant, avoid flood-prone roads, and adhere to disaster warnings as adverse weather conditions are expected to persist.

by Norman Palihawadane and Chaminda Silva

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Dubai deports 21 Sri Lankan criminals

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Twenty-one alleged underworld operatives, deported from Dubai, were taken into custody by the CID, upon their arrival at the Mattala International Airport yesterday, Police said.

The suspects, including alleged organised crime figures, known as “Mahawatta Chamara” and “Kudu Duminda,” were arrested within the airport premises, shortly after disembarking from several inbound flights that had been diverted to Mattala, due to adverse weather conditions affecting operations at the Bandaranaike International Airport (BIA), in Katunayake.

Police said the group had been residing overseas for an extended period while allegedly continuing to direct organised criminal activities and narcotics trafficking operations in Sri Lanka.

According to law enforcement authorities, the deportees were among a group of wanted criminal suspects linked to underworld networks and ongoing investigations into organised crime activities.

Senior Police officials stated that “Mahawatta Chamara” is expected to be handed over to the Central Crime Investigation Bureau for further investigations, while inquiries into the activities and alleged criminal links of the remaining suspects are also continuing.

Police sources said the deportees arrived in the country during the early hours of yesterday after flights originating from Dubai were rerouted to the Mattala Airport.

Authorities have not yet disclosed the specific charges pending against the suspects, but investigators believe several of them maintained operational ties to criminal syndicates involved in drug trafficking and other organised crimes, despite being based overseas.

The CID has commenced extensive investigations to determine the extent of the suspects’ alleged involvement in underworld activities and their connections to ongoing criminal operations in the country.

by Norman Palihawadane

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