Posted on October 2nd, 2022


The government of Sri Lanka has imposed a social security tax that aims to charge a 2.5% tax on those with a turnover of more than Rs 120 million. According to the tax details, it seems an indirect tax and people aren’t clear about the tax details. Can this tax shift to business consumers or the business person direct payments made to the government need details? My understanding is this tax should be a way of reasonable income distribution that a small portion of revenue get from higher income earners and distribute the tax revenue to poor people as a way of social security payment. Theoretically, it is a strategy of the government for a reasonable distribution of revenue.

I read news reports about some beggars and prostitutes who made millions of revenues and receive various subsidies. The government must have a practical auditing system to identify qualified people to gain social security payments.   

When Dr NM Perera was discharging the duties of the Minister of Finance, he rules BTT and WT. BTT (Business Turnover Tax) could be shifted to consumers in a way of increasing the price of goods and services but WT (Wealth Tax) could not shift to consumers like a direct tax.

There are no arguments against the social security tax. It is needed since independence and the government should have used the revenue to pay a social security payment to low-income earners. Many countries have social security payments to lower-income earners and the system reflects justice in many countries. 

The government expects additional tax revenue of Rs 140 billion from the new tax and whether the tax revenue collected from the social security tax is sufficient to make a liveable payment to low-income earners might be a question.   It is a good tax that reflects the real socialism in Sri Lanka than bogus Marxist political parties.

The other important point that needs to consider making social security payments is the condition that needs to insist upon. The lower income earners must take action to increase income and they should declare the actual revenue. If they become lower-income earners because of unemployed they must get action to find a job in a way education, skill training and any other way.

Many people in Sri Lanka use dishonest methods to gain social security payments and the payment system should have proper controls. 

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