Fury over tax ‘hardship’

THE Sri Lankan government hopes the country will emerge from an economic crisis by 2026, the president said last Wednesday (8), as hundreds protested a recent rise in taxes amid high inflation.

The island of 22 million has been battling its worst economic turmoil since independence from Britain in 1948. It has been forced to default on loans and seek a bailout of $2.9 billion (£2.38bn) from the International Monetary Fund (IMF).

Sri Lanka needs to raise taxes to boost government revenue to 11.3 per cent of GDP this year from 8.3 per cent in 2022 in order to get the IMF funds. It introduced new income taxes in January for professionals, ranging from 12.5 per cent to more than 36 per cent .

President Ranil Wickremesinghe told parliament he could see a way out as he worked through economic reforms to seal the deal with the IMF.

“It is difficult for all sections of society to survive,” he said. “However, if we endure this hardship for

another five to six months, we can reach a solution.”

He added, “We can achieve economic growth” by the end of 2023 and “can rise out of bankruptcy by 2026” or even earlier, if all political parties supported government initiatives such as raising taxes.

But his speech did little to deter a lunchhour rally by public workers. Shouting slogans, with some carrying black flags, they stepped out of government buildings to protest. Black flags were also tied to railings outside Colombo’s main hospital.

Doctors and university teachers at staterun hospitals and universities started a 24-hour strike last week, warning of longer industrial action.

“We have taken to the streets to tell this government they must immediately and unconditionally withdraw these unfair taxes,” said Ranjan Jayalal of the United Trade Union Alliance that represents workers of the state-run Ceylon Electricity Board.

“If they don’t do that, we will make this government kneel and force them to cancel this tax bill.”