Government servants cry foul over taxing allowances

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officials soon after getting the approval from the cabinet, a top treasury official revealed.

Of the 1.1 million public sector employees, 2.2 per cent have fallen into the category of “Legislators, Senior Officers and Managers” who are drawing monthly salaries ranging from Rs. 63,000 to Rs. 150,000 without allowances.

According to official statistics, their monthly minimum transport allowance was around Rs.50,000 and the payment for telephone bills Rs 20,000. Under the new tax rates, the employee who is earning Rs. 150,000 will be taxed at Rs. 2000 a month.

The tax on an employee earning Rs. 150,000 and a transport allowance of Rs. 50,000 would be Rs. 6,050 a month.

If a public official is in the Rs. 350,000 income range, then they will have pay 24 per cent tax, the official said.

Under the previous tax regime, the first Rs. 750,000 is tax free, the next Rs. 500,000 is taxed at 4 per cent and every subsequent Rs. 500,000 earned is taxed at 8 and 12 per cent, till a maximum tax rate of 16 per cent is reached, he disclosed.

With the new tax regime, the first Rs.1.2 million is tax exempt, and every subsequent Rs. 600,000 earned is taxed at 4, 8, 12, 16, and 20 per cent up to a maximum of 24 per cent.

Up to about 100,000 rupees there would not be a big change in the tax liability as the tax free threshold has been raised to Rs.100,000 rupees a month from Rs. 62,500.

The tax-free status for government servants was granted in 1979 to compensate for the unattractive salaries compared to the private sector, and to stop the drain of talent from the public service to foreign countries, and to the private sector during late President J.R. Jayawardena’s tenure.

It was re-introduced after 33 years in the 2011 budget which resorted to its first tax reforms from April 1 under the Rajapaksa regime.