Sri Lanka aims to set up a financial safety net of Rs 200 billion to provide social security support to the needy amidst the worst economic crisis in the country, President RanilWickremesinghe has announced.
The government is making maximum effort to reduce the impact through providing financial and logistical support,” said Mr.Wickremesinghe, who also holds the post of the finance minister of the debt-ridden economy.
President Wickremesinghe also explained that due to the pending food shortage, he was launching the food security programme in the country.
He was hopeful that through the food security programme, the government of the crisis hit country would be able to provide food free of charge to 10 percent of the population, who were unable to afford three meals.
He had previously warned of a food crisis in addition to the ongoing economic crisis, which has also left the country in shortage of fuel, gas, medicines as well as essential supplies.
Discussions were underway with Japan to regain their confidence and secure their support, the President added.
He said that countries were stepping forward with assistance in food and medical supplies, however, no country was providing fuel free of charge.An IMF bailout programme is being currently worked out .
The government has introduced a new tax called “SocialSecurity Contribution” (SSC) at 2.5% on the annual threshold turnover of companies exceeding Rs 120 million.
The Finance Ministry estimates Rs 140 billion revenue throughthis tax. The SSC appears to be similar to NBT since it is a turnover tax although details of the base have not been providedIn 2018 and 2019, revenue collection from NBT was Rs 105 billion.
The tax base for 2022 could be estimated as Rs 128 billion by considering nominal GDP growth since 2019.
SSC rate (2.5%) is 25% higher than the NBT rate (2%)which could provide a potential SSC revenue of Rs 160 billion.
However, theSSC tax-free threshold (turnover Rs 120 million per annum) is 10 times higher than the NBT threshold (Rs 12 million per annum).
A 30% reduction in collection could be assumed due to this higher threshold (reducing the potential SSC collection from Rs 160billion to Rs 112 billion).