News

SL’s debt crisis has aggravated due to fear of taxing the super-rich says LSSP leader

Published

6 years ago

2020/09/9

The fear of taxing the super rich has worsened Sri Lanka’s debt crisis, says SLPP MP Prof. Tissa Vitarana, leader of the Lanka Sama Samaja Party (LSSP).

Speaking in Parliament during the recent Vote on Account debate, Prof. Vitarana said he was glad that speakers from both sides of the House appeared, at least now, to accept that the country was faced with a severe economic crisis. This did not seem to be the case when promises were being made during the recent General Election campaign. But now when the money has to be found to fulfill the promises made, both sides of the House came out with the same solution, more and more loans, i.e. both local and foreign borrowing, the MP said.

“This is inadvisable as it would deepen the debt crisis facing the country and the people”, he cautioned.

Now, and in the November Budget, Prof. Vitarana called for a different approach to obtain the money the country requires. Wasteful expenditure, both local and foreign, should be minimized. In order to cut Sri Lanka’s foreign debt, instead of increasing it, strict import restriction together with increased export earnings is essential to achieve a positive trade balance. But the latter would take time as it requires proper planning, full mobilization of all the required resources and firm committed action based on science and technology by the government.

As the former Minister of Science and Technology, having established 263 Vidatha resource centres at divisional level across the country and helped to produce over 12,300 micro, small and medium entrepreneurs (17 exporters and 64 suppliers to the food chains and 57 to hotels – refer IPS report), Prof. Vitarana said that he would have liked to make a contribution when the country is facing a difficult time. However, it would appear that there are more capable people available.

“I wish them all success in the national interest. In the interim, less reliable short-term funding solutions, like tourism and repatriated incomes are being promoted, but alas they too have fallen and will take time to revive in the context of the deepening global crisis of capitalism aggravated by Covid-19”, he noted.

Internally, as the Treasury is averse to deficit financing, taking money from the Central Bank, for fear of inflation etc., other ways have to be found to increase government revenue. Rather than taking more loans and getting deeper into debt, Prof. Vitarana suggested that the government should raise the required money by increasing the tax on the super-rich. This was the way out of the debt crisis for the country and the government and the next logical step now that the government has returned to the correct policy of developing the national economy by reducing, and where possible banning, the import of foreign goods.

This was done when Dr. N. M. Perera was the Finance Minister in the SLFP/LSSP/CP Coalition Government led by Mrs. Sirimavo Bandaranaike after it came to power in 1970, the MP recalled.

In Sri Lanka, the upper limit of direct taxation on individuals, mainly the super-rich is one of the lowest in the world, a mere 18%, while the average in Europe is around 45%. In some Scandinavian countries that provide their citizens with a welfare state, the money required is obtained through a higher direct tax with an upper limit of about 60%, which targets the super-rich, he said.

When faced with the severe triple crisis (debt, oil and food) Dr. N. M. Perera as the then Finance Minister in 1970 enabled the country, when faced with a severe global food scarcity, to avoid the deaths of thousands due to starvation, unlike in most other Third World countries, by raising the upper limit of direct taxation to 75%. The funds generated enabled him to provide a measure of rice free and all essentials at low prices through the excellent cooperative outlets, Prof. Vitarana further said.

He was able to not only to balance the Budget but also to produce a budget surplus. This enabled him to cut foreign loans and get the country out of the debt trap. Not only was the foreign debt reduced to the lowest level in the country’s history, he also achieved the economic stability that was required for development, Prof. Vitarana further recalled.

The IMF promotes indirect taxation, like VAT, as the main source of government revenue and in the recent past, 87% of tax revenue was obtained this way. Only 13% was obtained through indirect taxation, and as the upper limit was lowered to 18%, the class of the super-rich (a mere 1% who some estimate as having 30% of the total personal wealth in the country) were practically unaffected and did not contribute their share to the burden, he said.

At this time of crisis, Prof. Vitarana proposed that the government should increase the upper limit of direct taxation to 70% so that while the required funds are obtained, the import of luxuries and non-essentials would drop. It would also narrow the huge gap between the super-rich and the poor, which not only has a bad psychological demonstration affect, but also leads to more crime and social instability. Globally economists have warned of this danger, he added.

All News Advertisement

Latest News

Landslide Early Warnings issued to the districts of Colombo, Gampaha, Kalutara, Kegalle, Nuwara Eliya and Ratnapura

Published

4 hours ago

2026/05/23

Priyan

The National Building Research Organisation [NBRO] has issued landslide early warnings to the Districts of Colombo, Gampaha, Kalutara, Kegalle, Nuwara Eliya and Ratnapura valid from 09:00 hrs on 23.05.2026 to 09:00 hrs on 24.05.2026

Accordingly,
LEVEL III [RED] landslide early warnings have been issued to the Divisional Secretaries Divisions and surrounding areas of Deraniyagala, Ruwanwella and Dehiowita in the Kegalle district and Ratnapura, Ayagama, Kuruwita and Eheliyagoda in the Ratnapura district.

LEVEL II [AMBER] landslide early warnings have been issued to the Divisional Secretaries Divisions and surrounding areas of Seethawaka and Padukka in the Colombo district, Attanagalla in the Gampaha district, Palindanuwara, Ingiriya, Bulathsinhala and Horana in the Kalutara district, Yatiyanthota in the Kegalle district and Pelmadulla, Kiriella, Kalawana, Nivithigala and Elapatha in the Ratnapura district.

LEVEL I [YELLOW] landslide early warnings have been issued to the Divisional Secretaries Divisions and surrounding areas of Divulapitiya and Mirigama in the Gampaha district, Mathugama and Agalawatta in the Kalutara district, Bulathkohupitiya in the Kegalle district, and Ambagamuwa in the Nuwara Eliya district.

Latest News

Most people seeking green cards must now apply from outside US

Published

4 hours ago

2026/05/23

Priyan

The US has announced a new policy that means most immigrants seeking a green card will have to leave the country and apply at an embassy or consulate abroad.

The US Citizenship and Immigration Services (USCIS) said on Friday that people seeking a change in status must do so through consular processing outside of the country “except in extraordinary circumstances”.

The move – a part of the Trump administration’s effort to curtail illegal immigration – closes a loophole that had allowed visa holders and visitors to apply for a green card while still in the US.

Critics of the policy say the longstanding system allowed families to stay together during the lengthy application process.

The new method could also make it difficult or impossible for some immigrants who leave the country in hopes of gaining a green card to return.

The USCIS policy memo states that people such as students, temporary workers or people on tourist visas need to go through the Department of State from outside of the US.

“When aliens apply from their home country, it reduces the need to find and remove those who decide to slip into the shadows and remain in the US illegally after being denied residency,” USCIS said, making the system “fairer and more efficient”.

On X, the Department of Homeland Security, which oversees USCIS, said: “The era of abusing our nation’s immigration system is over.”

“We’re returning to the original intent of the law to ensure aliens navigate our nation’s immigration system properly,” USCIS Spokesman Zach Kahler said.

“From now on, an alien who is in the US temporarily and wants a green card must return to their home country to apply, except in extraordinary circumstances,” he continued.

Kahler said the policy allows the immigration system “to function as the law intended instead of incentivising loopholes” and that visits “should not function as the first step in the green gard process”.

It is unclear whether pending green card applications will be affected.

A spokesperson for the USCIS told the BBC that as the policy is rolled out, “people who present applications that provide an economic benefit or otherwise are in the national interest will likely be able to continue on their current path”.

“Others may be asked to apply abroad depending on individualised circumstances,” it said.

Being a green card holder, or lawful permanent resident, allows a person to live and work permanently in the US. Obtaining one is a multi-step process that can take months to several years.

There are currently more than a million legal immigrants waiting for approval on their adjustment of status green card applications, according to the Cato Institute’s director of immigration studies.

Kahler argued that following the law allows the majority of cases to be handled by the US State Department at consular offices abroad and frees up USCIS resources to focus on processing other cases that fall under its purview – such as visas for victims of violent crime and human trafficking, naturalisation applications, and other priorities.

The move is consistent with longstanding immigration law and immigration court decisions, the agency said. Immigration officers are being directed to “consider all relevant factors and information on a case-by-case basis when determining whether an alien warrants this extraordinary form of relief”.

Michael Valverde, who was a senior official at USCIS under both Republican and Democratic administrations until his departure last year, said to the BBC’s US media partner CBS that Friday’s announcement would “disrupt the plans of hundreds of thousands of families and employers annually”.

“This is a largely unprecedented move that will limit lawful immigration to the US greatly,” Valverde said. “People who followed the rules faithfully now face tremendous uncertainty.”

The Trump administration has instated bans or restrictions on citizens from nearly 40 countries.

Another policy from the administration this year has paused all visa issuances to immigrant visa applicants from 75 countries.

Overstaying a US visa can lead to deportation, ineligibility for future visas and re-entry bans lasting up to 10 years, according to the US State Department.

[BBC]

Latest News

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

Published

8 hours ago

2026/05/23

Priyan

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