The present government’s income tax policy to attract an effective tax rate of 30% would require a salary above Rs. 500,000 per month. Probably 90% of the working population draws less than 500,000 per month.

This government is now amending the income tax laws to impose a 30% income tax on EPF/ETF. This tax will apply on all of EPF/ETF income without any tax relief. Therefore, even an employee earning a monthly salary of Rs. 30,000 will be liable to bear the tax of 30% on their savings on EPF/ETF. ‘Is this justified against low income workers?’ asked SJB, Parliamentarian Eran Wickramaratne issuing a special statement today (30).

The government declared the economy bankrupt and entered into an agreement with the International Monetary Fund to obtain a loan of US $ 3 billion. Restructure of the country’s debt is a condition involved.

Foreigners invest in bonds of small countries looking for more income, absorbing the risk factor. Having already profited from the high interest/income, restructuring of said loans does not bear significant consequences to the investors. The government has already declared bankruptcy and have stopped repaying foreign debt, including bonds. Although it was initially announced that the foreign bond will be restructured, the government recently postponed the discussion with foreign investors for the second time. However, it is foreign debt that is best restructured.

Instead, the government has prioritised domestic debt restructuring. This is an injustice to the people of the country. The value of their investments has already taken a hit from inflation and devaluation of currency.

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