AP

Sri Lanka aims to hike taxes in budget to soften crisis

Nov 14, 2022, 5:39 AM | Updated: 6:14 am

People gather at a street side food seller at a market place in Colombo, Sri Lanka, Monday, Nov. 14...

People gather at a street side food seller at a market place in Colombo, Sri Lanka, Monday, Nov. 14, 2022. (AP Photo/Eranga Jayawardena)

(AP Photo/Eranga Jayawardena)

COLOMBO, Sri Lanka (AP) — Sri Lanka’s president on Monday proposed to more than double the country’s tax revenue as the island nation struggles to come out from its worst economic crisis.

Unsustainable debt, a severe balance of payment crisis on top of lingering scars of the COVID-19 pandemic have led to a severe shortage of essentials such as fuel, medicine and food, and the soaring prices have caused severe hardships to most Sri Lankans.

Presenting the annual budget in Parliament, President Ranil Wickremesinghe put the country’s plight down to the reduction of government revenue and stressed the need to increase it.

Wickremesinghe said the country’s revenue has declined significantly to 8.3% of the GDP in 2021, which he said was one of the lowest in the world. He said his government presented revenue measures to correct the 2019 tax cuts on three occasions this year.

“These tax reforms will help increase revenue in 2023 and beyond, enabling to move away from costly monetary financing (money printing) to cover government expenditure in the future,” said Wickremesinghe.

According to statistics presented in the budget speech, the government expects to increase revenue from taxes to 3.1 trillion Sri Lankan rupees ($8.5 billion) from the 1.3 trillion rupees in 2021.

The document shows that income tax would go up three times from 302 billion rupees ($824 million) to 912 billion rupees ($ 2.5 billion).

The economy deteriorated as the COVID-19 and the 2019 Easter Sunday bombings devastated tourism, which is a key source of foreign exchange. At the same time, in 2019 the former government pushed through the largest tax cuts in Sri Lankan history.

Sri Lanka’s foreign reserves have dwindled to around $1.5 billion and the country has no sufficient dollars to import key essentials. Inflation has increased over 90% in recent months.

Sri Lanka has suspended repayment of nearly $7 billion in foreign debt due this year pending the outcome of talks with the International Monetary Fund on a rescue package. The country’s total foreign debt exceeds $51 billion, of which $28 billion has to be repaid by 2027.

The economic meltdown triggered a political crisis and thousands of protestors stormed the official residence of the president in July, forcing Gotabaya Rajapaksa to flee the country and later resign.

Wickremesinghe said negotiations with the IMF were progressing while the government is in talks with India and China on debt restructuring.

“We are confident that these discussions will lead to positive outcome,” he said.

Voting on the budget will take place on Nov. 22.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Police clear the area following a shooting at the Kansas City Chiefs NFL football Super Bowl celebr...

Associated Press

1 dead, many wounded after shooting at Kansas City Chiefs’ Super Bowl victory parade

One person died after 22 people were hit by gunfire in a shooting at the end of the Kansas Chiefs' Super Bowl victory celebration Wednesday.

6 days ago

This image from House Television shows House Speaker Mike Johnson of La., banging the gavel after h...

Associated Press

GOP-led House impeaches Homeland Security Secretary Mayorkas — by one vote — over border management

Having failed to impeach Homeland Security Secretary Alejandro Mayorkas the first time, House Republicans are determined to try again Tuesday.

7 days ago

Defense Secretary Lloyd Austin, right, and Kenya's Defense Minister Aden Duale, left, listen during...

Associated Press

Defense Secretary Lloyd Austin hospitalized with bladder issue

Defense Secretary Lloyd Austin has been hospitalized following symptoms pointing to an “emergent bladder issue."

9 days ago

Joel Osteen, the pastor of Lakewood Church, stands with his wife, Victoria Osteen, as he conducts a...

Associated Press

Woman firing rifle killed by 2 off-duty officers at Houston’s Lakewood Church run by Joel Osteen

A woman entered the Texas megachurch of Joel Osteen and started shooting with a rifle Sunday and was killed by two off-duty officers.

9 days ago

(Pexels photo)...

Associated Press

Baby in Kansas City, Missouri, dies after her mother mistakenly put her in an oven

An infant in Missouri died when her mother mistakenly put her down for a nap in an oven, a prosecutor said Saturday.

10 days ago

Former Arizona Department of Corrections boss Charles Ryan received probation on Feb. 9, 2024. (AP ...

Associated Press

Former Arizona corrections boss sentenced to probation over armed 2022 standoff with police

Former Arizona Corrections Director Charles Ryan was sentenced Friday to probation for his no-contest plea to a disorderly conduct charge stemming from a 2022 armed standoff at his Tempe home.

11 days ago

Sponsored Articles

...

DISC Desert Institute for Spine Care

Sciatica pain is treatable but surgery may be required

Sciatica pain is one of the most common ailments a person can face, and if not taken seriously, it could become one of the most harmful.

...

Fiesta Bowl Foundation

The 51st annual Vrbo Fiesta Bowl Parade is excitingly upon us

The 51st annual Vrbo Fiesta Bowl Parade presented by Lerner & Rowe is upon us! The attraction honors Arizona and the history of the game.

...

Collins Comfort Masters

Avoid a potential emergency and get your home’s heating and furnace safety checked

With the weather getting colder throughout the Valley, the best time to make sure your heating is all up to date is now. 

Sri Lanka aims to hike taxes in budget to soften crisis