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Sri Lanka former finance minister Ravi K laments IMF-backed tax hike

Sri Lanka former finance minister Ravi K laments IMF-backed tax hike

ECONOMYNEXT – Amid revenue shortfall concerns raised by the International Monetary Fund (IMF), former Sri Lanka Finance Minister Ravi Karunanayake has called for taxation that isn’t subject to IMF recommendations and is fairer by small and medium entrepreneurs.

Speaking to reporters in Colombo days after an IMF press briefing, Karunanayake said the country “cannot bear tax increases like this”.

“After collecting a certain amount of tax revenue, taxes must then be levied in a way that is affordable. That is my view. Taxes can’t be raised by 50, 60 percent just because the IMF comes and says so,” he said.

The capacity to pay must be considered when taxes are imposed, said Karunanayake, adding that it “has to be fair”.

Karunanayake, whose stint as finance minister under then prime minister Ranil Wickremesinghe was controversial, made these remarks to reporters on Sunday October 01 at the International Book Fair, despite heavy rain.

“There is a limit to what small and medium entrepreneurs can pay. Today, interest rates have gone up by exceedingly high margins and they simply cannot afford it,” said Karunanayake.

The former minister said taxation should be made more practical.

His apparent lamentations against incumbent president Ranil Wickremesinghe’s administration’s tax policy come amid calls by the IMF to strengthen tax administration, remove tax exemptions, and actively eliminate tax evasion in order to boost revenue, which an IMF team said last Wednesday was below anticipated levels.

Meanwhile, President Wickremesinghe in a recent meeting with IMF chief Kristalina Georgieva had explained issues faced by the local business community amid concerns over taxes in line with the global lender’s programme.

Advisor to the president Ruwan Wijewardene said on September 25:“They had a very good talk about what’s happening in Sri Lanka and specially what’s happening on debt restructuring.”

“In that meeting, the president was also keen on how we can have an environment to help businesses survive this economic crisis,” he said. (Colombo/Oct02/2023)