Rajapaksa promises 20% tax cut if …
Posted on June 4th, 2018
By Norman Palihawadana Courtesy The Island
June 5, 2018, 12:16 pm
Former President Mahinda Rajapaksa yesterday said a new government, under his leadership, would lower taxes by 20%.
“People are suffering due to extremely high taxes. They can’t even eat properly or save any money because of the staggering taxes. When we form a government we will reduce taxes by 20%.”
Rajapaksa also condemned the decision taken by the government to privatise the railway system in the Hambantota District.
The Cabinet last week approved a proposal to call for an international tender to build a 100 km railway line linking Beliatte to Hambantota, Kataragama and the Mattala airport on a Build-Operate and Transfer (BOT) basis. The estimated project cost is USD 800 million (Rs. 127 billion). The successful bidder will also be able to set up restaurants, cargo storage facilities and shopping complexes in the areas coming under its purview.
“This is the first step in privatizing the railway department. There is no need for us to privatize the railways because we have a long tradition of government run railways. This is what happens under UNP administrations,” he said.
Rajapaksa added that the government had started selling state assets as soon as it came to power and it was a further reflection of the anti-national disastrous economic policies of the regime.
June 4th, 2018 at 5:23 pm
Very unfortunate the former president has got it wrong.
Instead of Yaldevi train line, Mahinda should have built this long awaited railway line linking Matara and Kataragama and Hambantota. It has been promised since 2000. If this is privatisation, Colombo South Port, Hambantota Port before 2017, Port City, Shangri-La and a number of other excellent development works would have amounted to privatisation of our ports and even land.
On the other hand the Sooriyawewa Cricket Stadium did nothing to uplift the lives of people in Hambantota.
Hopefully Gotabaya will not follow past “development” approaches that can be best described as “dunna dunugamuwe, eethala kithala gamuwe, muwek handuwayi sabaragamuwe”.
Reducing tax is a good move. But state revenue must be earned. Otherwise the nation collapses. Which tax Mahinda plans to reduce by 20%? Obviously not VAT as it is not 20%! It must be income tax. In other words, rich businessmen who are now flocking around Mahinda will benefit from this 20% tax cut. It does nothing to feed the people because they are unaffected by income tax. Remove VAT and import duty on essential items instead.
June 5th, 2018 at 8:56 am
Dilrook,
Mahinda wants to reduce the selected tax/taxes by 20% from whatever it is now. So, for example, a 15% existing tax would become a 12% tax after the 20% reduction by 3%.
June 5th, 2018 at 8:02 pm
@Ananda
That once again worsens the debt crisis. Government spent 103% of state revenue on debt service in 2012. It was over 95% since then until 2016. This means the government had to borrow all its other expenses. In 2017, it was reduced to 80%. Yes; it was an achievement by Ravi despite all his other problems. At 80%, the debt crisis eased. If tax is reduced by 20% in the manner as you say across the board, this will once again rise to 100%.
The right thing to do is to remove taxes on consumption goods and impose a new tax on say luxury vehicles, property over a certain value or any other non-production assets. But a large section of the local minority business community has joined Mahinda now so this option is out. They are with Mahinda only as a protest against the UNP regime. They will go back to UNP when elections are called.
June 5th, 2018 at 9:31 pm
Dilrook,
That may be, but I was pointing out a simple mistake you made when you said: “Which tax Mahinda plans to reduce by 20%? Obviously not VAT as it is not 20%! ”
A tax need not be 20% to be reduced by 20%.