Business

Cure could be worse than the disease says company director

Published

3 years ago

2022/11/8

Sahan Weerasooriya

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.

All News Advertisement

Related Topics:Chaminda Wanigaratne Director Automotive at Ideal Motors (Pvt) Ltd

Up Next

Colombo Port operations continue without any hindrance

Don't Miss

Notable dip in blue-chip counters as macro and micro uncertainties weigh on bourse

Click to comment

Business

Foreign Minister defends India pacts, sidesteps transparency demand

Published

11 hours ago

2026/01/6

Sahan Weerasooriya

The press conference held at the Foreign Ministry in Colombo yesterday. From left:Arun Hemachandra, Deputy Minister of Foreign Affairs, Vijitha Herath, Minister of Foreign Affairs and Tourism and Prof. Ruwan Ranasinghe, Deputy Minister of Tourism

In a press conference marked by both clarity and pointed omission, Foreign Affairs and Tourism Minister Vijitha Herath, yesterday offered a robust defence of two controversial bilateral agreements with India but conspicuously avoided committing to tabling their full texts in Parliament.

The minister’s appearance, billed as a year-opening briefing, took a sharp turn when questioned on the strategic implications of the India-Sri Lanka Defence Cooperation Agreement and Sri Lanka’s acceptance of the Indian Pharmacopoeia.

“No Indian military camps on our soil”

Responding in Sinhala to a question posed in English, Minister Herath moved first to allay what he suggested were widespread misapprehensions about the defence pact.

“This agreement is especially for data and information exchange purposes regarding drug trafficking, drug mafias, human trafficking, and any terrorist activities that could threaten regional security and peace,” Herath stated.

He emphasised that it would also facilitate “various support related to the defence sector.”

In his most definitive assertion, aimed at quieting a persistent national anxiety, the Minister declared: “We must clearly say that there is no plan or possibility of setting up Indian defence camps on Sri Lankan soil.” He categorised the pact not as a “defence agreement” but a “defence cooperation agreement in its real sense,” claiming it creates an “advantageous position” for Sri Lanka.

He linked recent post-‘Ditwah’ cyclone disaster support from India, as well as U.S. aerial support during recovery efforts, to the frameworks established by such cooperation agreements, arguing they have proven beneficial.

Indian Pharmacopoeia: A reputation-based advantage

On the equally contentious acceptance of the Indian Pharmacopoeia – a standard synopsis for drug manufacturing – Minister Herath framed it as a logical step that formalises existing practice.

“We already import a significant share of medicines from India,” he noted. The agreement, he explained, signifies the acceptance of medicines exported by a “reputed Indian pharmaceutical company” approved by its national regulators.

He assured the public that Sri Lanka’s National Medicine Regulatory Authority (NMRA) will continue to remain the monitor. “By entering into this, no disadvantage will happen to us. Only an advantage will happen… it will only be beneficial to us,” he emphasised.

The unanswered question

Despite the detailed assurances, the Minister pointedly ignored the final and arguably most critical part of the question posed by The Island Financial Review : whether the government would table the full text of the two agreements in Parliament for transparent debate and discussion.

This omission is likely to fuel further controversy, as opposition parties, civil society groups, and independent analysts have repeatedly demanded full parliamentary scrutiny, arguing that agreements touching on sovereignty and public health mandate the highest level of public transparency.

Tourism Pride

Shifting to his tourism portfolio, Minister Herath struck an optimistic note, citing record tourist arrivals and foreign remittances in 2025 as a sign of resilient recovery post-Ditwah.

The conference also touched on global affairs. When asked about the U.S. arrest of Venezuelan President Nicolás Maduro, Herath presented a nuanced governmental position. He stated that while his party, the JVP, condemns the action, the government’s official stance is to urge respect for national sovereignty in line with the UN Charter – a reflection of the coalition’s delicate balancing act between ideological roots and diplomatic pragmatism once in governance.

Minister Herath’s explanations provide the government’s clearest public rationale yet for the India agreements, directly confronting fears over militarisation and pharmaceutical quality. However, the deliberate sidestepping of the transparency query left a communication deficit at the heart of the press conference.

High-stakes diplomacy

It reflected a perception that while the administration is willing to defend its policy outcomes, it remains reluctant to subject the processes of high-stakes diplomacy to the full glare of parliamentary and public scrutiny. As these agreements continue to shape Sri Lanka’s strategic and health landscape, the call for their full disclosure is now accompanied by a louder question about the government’s commitment to open governance.

by Sanath Nanayakkare

Business

‘Vehicle-Testing Can Save Lives’

Published

11 hours ago

2026/01/6

Sahan Weerasooriya

Dharmasiri Gamage, Director, Presidential Secretariat, (4th from left), receiving the proposal from Prasanna De Zoysa (2nd from left), AAC Sectoral Chairman, Road Safety and Devapriya Hettiarachchi (3rd from left), Secretary, AAC at the Presidential Secretariat.

Automobile Association of Ceylon (AAC), in collaboration with the Federation Internationale de L’ Automobile (FIA) and under the UN Decade of Action for Road Safety has been consistently engaging in road safety enhancement programs for all citizens of Sri Lanka.

Current data indicates that while over 08 million vehicles are registered in the country, only heavy vehicles (less than 20% of the vehicle population) are subjected to compulsory road-worthiness tests.

Fatal accidents due to technical failures in vehicles are on the rise and the damage to lives and property is severe.

We also understand that there is a death every three hours and eight deaths per day in road accidents. This amounts to nearly 3000 deaths in road accidents per year.

AA of Ceylon has launched the “Vehicle Testing can Save Lives” project with the advice and support given to execute our campaign by the Minister of Transport, chairman, National Council for Road Safety (NCRC), Deputy Inspector General of Police (Traffic Division), Dr. Indika Jagoda, Deputy Director (Accident Service), National Hospital, president, Lions Club of Boralasgamuwa, Metro(Lions Club International – District 306 D 2) and other stake-holders to find a workable, low / cost solution for mandatory vehicle testing in Sri Lanka.

Therefore, this project aims to educate the public on the necessity of checking essential safety features in all vehicles and the benefits of same to all road users.

AAC has therefore respectfully requested Anura Kumara Dissanayake, President of the Democratic Socialist Republic of Sri Lanka, to consider implementing the proposal we have submitted to him, to minimize fatal accidents, injuries to people and damage to vehicles and property due to road accidents and to also implement a rule to have compulsorily road-worthiness checking of all vehicles. (AAC)

Business

INSEE Lanka appoints new Chief Executive Officer

Published

11 hours ago

2026/01/6

Sahan Weerasooriya

Eng. Thusith C. Gunawarnasuriya

Siam City Cement (Lanka) Limited (INSEE Lanka) has announced the appointment of Eng. Thusith C. Gunawarnasuriya as its new Chief Executive Officer, effective 01 January 2026. He succeeds Nandana Ekanayake, who will continue to serve as Chairman, ensuring leadership continuity and strategic stability for the organisation.

A long-standing contributor to INSEE’s journey, Thusith has worked with the company through its evolution under Holcim (Lanka) Ltd, LafargeHolcim and INSEE, playing pivotal roles that influenced both operational progress and strategic direction.

Rejoining INSEE Lanka in January 2025 as Chief Operating Officer, he has since demonstrated exceptional leadership, driving topline growth, improving EBITDA performance, and strengthening talent development initiatives that enhanced organisational capability and business outcomes.

His expertise in business strategy, operations excellence, and supply chain transformation is well-recognised, supported by over 25 years of multi-industry and multi-country leadership experience. His career includes senior positions at Lion Brewery (Ceylon) PLC, Hemas Manufacturing, Fonterra Brands Lanka, GlaxoSmithKline, MAS Active, and DMS Software Engineering. His international exposure spans India, Bangladesh, and Thailand.

Thusith is a proud alumnus of Dharmaraja College, Kandy, and holds a BSc (Hons) in Electrical & Electronic Engineering from the University of Peradeniya, an MBA from the University of Colombo, and an MSc in Business & Organizational Psychology from Coventry University, UK. He has completed executive leadership programs at IMD (Switzerland) and the National University of Singapore. He is also a member of IEEE (US), CILT (UK), ISMM (Sri Lanka), and IESL (Sri Lanka).

Chairman’s Quote – Nandana Ekanayake:

“Thusith’s deep understanding of our business, strong operational mindset, and proven leadership make him the ideal successor to lead INSEE Lanka into the next phase of growth. His experience within INSEE and across multiple industries, positions him well to deliver on our long-term ambitions and uphold the values that define the organisation.”