A host of new tax proposals have come in from the Prime Minister's office - not limited to VAT and TelecomLevy.
Other tax rates (including income tax) have been raised, thresholds are brought down, withholding taxes are reinstated too. (1/5)
#EconomicCrisisLK #DefaultLK
Other tax rates (including income tax) have been raised, thresholds are brought down, withholding taxes are reinstated too. (1/5)
#EconomicCrisisLK #DefaultLK
Tax hikes are important for a few key reasons
1) Reduces need to borrow to finance budget deficit
2) Reduces excess demand in the economy to reduce imports and support the LKR
3) Allows the financing of strong social spending programs (especially safety nets in a crisis) (2/5)
1) Reduces need to borrow to finance budget deficit
2) Reduces excess demand in the economy to reduce imports and support the LKR
3) Allows the financing of strong social spending programs (especially safety nets in a crisis) (2/5)
Sri Lanka has had falling tax revenue and low tax collection for a while now, and this was worsened by the 2019 tax cuts. These charts show how this compares with other countries and over time. (3/5) 
While these tax measures are a positive step due to these reasons, there are still more steps to go. Sri Lanka needs to reduce as many tax exemptions as possible, while there are other quick tax wins as well, sin taxes come to the forefront here. (4/5)
Making sure the revenue earned from these taxes goes primarily to social spending programs (eg-health, education), and protecting the most vulnerable in the short term must be a key aim of overall budget policy. It should not go towards handouts to the rich and connected. (5/5)
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