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Govt: Rental income tax will affect only high-wealth individuals

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The Ministry of Finance yesterday said that the focus of envisaged Rental Income Tax was on high-wealth individuals, and not on average income earners. In a statement titled ‘Clarification on Imputed Rental Income Tax’ the Ministry said: The recent publication of the International Monetary Fund (IMF) supported Extended Fund Facility (EFF) programme related documents make reference to a proposed property tax to be implemented as an imputed rental income tax. The purpose of this press release is to clarify certain speculations and misconceptions regarding the same.

“One of the key reasons for Sri Lanka’s deep, complex and unprecedented economic crisis is the sharp decline in government tax revenue that led to high budget deficits and resultant escalation of public debt to unsustainable levels. Accordingly, the remedial measures to recover from the crisis have entailed a focused effort to improve the revenue of the government. Revenue based fiscal consolidation has been implemented during the last two years in an attempt to bring Sri Lanka’s government revenue from a record low 8.3% of GDP in 2022 to 15% of GDP by end 2025. In the year 2023, tax reforms focused on progressive corporate and personal income tax measures. In 2024, revenue enhancement is supported by Value Added Tax (VAT) reforms, including elimination of most exemptions and rate adjustments.

“Thus far, the revenue targets for 2023 have been largely met and target for 2024 is on track to reach the required level of 13.5% of GDP by end 2024. Therefore, there remains 1.5% of GDP revenue gains expected in 2025 in order to reach the 15% of GDP revenue target. The main revenue measure expected to help achieve the 2025 target is a wealth tax that is focused on property. From the outset of the IMF programme approval in March 2023, the revenue measures expected in 2023, 2024, and 2025 have been clearly presented in the public domain.

“The envisaged property tax is in an advanced stage of design and therefore, it is premature to outline specific details of rates and thresholds. However, the focus of this tax is on high wealth individuals, and not on average income earners. This objective will be achieved by a suitable tax-free threshold to ensure that the tax is targeted on very high value property or multiple properties that are owned by wealthy members of society. This specific targeting is evidenced by the fact that the tax is expected to yield 0.2% of GDP by 2025 and 0.4% of GDP in a full year in 2026.

“The design of the tax will also ensure appropriate set off mechanisms to avoid double taxation and any elements that distort economic incentives. Property taxes are implemented in many countries (including developing countries like India) since they are considered to be a highly efficient, progressive, and non-distortive means of generating revenue to fund public services.

“The tax is expected to go through the regular legal process of amendments to the required legislation and is expected to come into force in April 2025. In addition to completing the legislative process, there is significant administrative work required to be done in terms of improving valuation mechanisms and databases in order to implement this proposed tax measure that was first announced in March 2023 with the publication of IMF programme documents. In fact, that is not a new tax measure. The Inland Revenue Act No. 10 of 2006 included a similar imputed income calculation termed “Net Annual Value”. Property in Sri Lanka is also subject to existing taxes such as local authority Rates and Stamp Duty – therefore, there is significant precedence for such a property tax.”

The continued improvement of government revenue and associated reduction in budget deficits has supported the government’s efforts to restore economic stability, and has helped bring down interest rates and support appreciation of the currency, which brings with it material improvements to all citizens. A failure to reach the required level of government tax revenue that can fund public expenditure would lead to a recurrence of the economic crisis that had devastating impacts on the entire country.



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Results of 2024 GCE Advanced Level examination released

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The Department of Education has announced that the results of the 2024 General Certificate of Education Advanced Level Examination have been released online,  and can be viewed on : www.doenets.lk

 

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Training teachers for the new education reforms will commence in May – PM

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Prime Minister Dr. Harini Amarasuriya stated that the training of teachers required for the new education reforms will commence in May, and that contracts granted to political cronies in local government institutions will be brought to an end following the upcoming local government elections.

The Prime Minister made these remarks while addressing public gatherings held in the areas of Mirigama, Minuwangoda, and Katana in the Gampaha District.

Addressing the gatherings, Prime Minister stated:

“From birth to death, all the aspects of life of a person are handled by local government institutions. However, to this day, these institutions lack proper systems even to provide the people with basic facilities.

We are committed to working with a proper system, free of fraud and corruption, and managing every rupee carefully and attentively. We are identifying the needs of people and implementing projects under a systematic plan to develop rural sectors.

You elect fellow members who stand firmly against fraud and corruption through two decisive elections. First, you elect Anura Kumara as President, a leader committed to fighting corruption. Then, in the parliamentary election, you choose a group of qualified individuals who are equally dedicated to this cause to represent you in Parliament.

To ensure that the funds allocated for rural development reach the people, the local government institutions which are the closest to the villagers must also be clean and transparent. That is why this election is so important to us.

The people and the villages come to experience our corruption-free political culture through local government institutions. These institutions must properly implement, monitor, and evaluate the development projects allocated to the rural sector. The era of awarding contracts for such projects to political cronies must end.

Although early childhood development is a crucial part of education, there has never been a proper system for it. We are now establishing such a system. Starting in May, teacher training for the modern education which is being introduced  will begin. We have a comprehensive plan for development across all sectors.

The Ministry of Education has received billions worth of projects, but there is no proper implementation process. For example, 1,500 smart boards were brought for smart classrooms, but the Secretary to the Ministry has not implemented a system to distribute them to schools. Teachers have not been trained to use them. Teacher training institutes still follow outdated curriculum. This will be corrected through the new education reforms,

In order to deliver all these benefits to the rural sector efficiently, it is essential to elect the right people for the right purposes. Therefore, in the upcoming local government elections, Prime Minister Dr. Harini Amarasuriya urged the public to vote for the candidates who are free from fraud and corruption presented by the National People’s Power (NPP).”

The event was attended by Parliament Chief Organizer of the ruling party Dharmapriya Wijesinghe, Members of Parliament Ruwanthilaka Jayakody and Chaminda Lalith Kumara, along with several local government candidates and the residents of the area.

[Prime Minister’s Media Division]

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Foreign Minister Herath will attend Pope’s funeral today

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Foreign Minister Vijitha Herath will represent Sri Lanka at the funeral of Pope Francis in the Vatican City, the Ministry said.

The funeral is scheduled for today.

About 50,000 people came to pay their respects to the late Pope on Thursday, the Vatican news service said.

“Pope Francis’ funeral Mass will take place on Saturday, April 26, at 10:00 AM in St. Peter’s Square, marking the beginning of the Novemdiales, an ancient tradition of nine days of mourning and Masses for the repose of the late Pope’s soul,” according to the Vatican news service.

“The Novemdiales Masses will be held each day at 5:00 PM (GMT +2) in St. Peter’s Basilica, except for the Mass on Divine Mercy on Sunday, April 27, which will take place at 10:30 AM in St. Peter’s Square.”

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