Government tax revenue raised via taxes rose by 24.6 percent to Rs.798.8 billion in the six months this year compared to the same period in 2021 as most of the tax reforms proposed in May came into effect from June 1 2022 onwards, Finance Ministry data showed. .
The government raised the VAT to 12 percent from 8 percent, corporate tax rate to 30 percent from 24 percent, the highest personal income tax rate to 34 percent from 18 percent, the telecom levy to 15 percent from 11.25 percent and the betting and gaming levy to 15 percent from 10 percent, effective from June 1, 2022, while some of the other tax increases are due from October 1 onwards.
Later in August, the VAT was raised again to 15 percent in an interim budget and the legislation to bring in the Social Security Contribution levy of 2.5 percent affecting a broader segment of businesses was also passed.
Both taxes are coming into effect from September as part of broader revenue sector reforms in a 180 degree reversal from the more generous tax policy adopted in December 2019, which left the government coffers dry, partly contributing to the present day economic crisis.
More revenue enhancing proposals in the likes of capital gains tax could be included in the 2023 budget slated to be presented in November as part of the deal with the International Monetary Fund (IMF).
The low tax regime was estimated to have cost the government of between Rs.600 to 800 billion in annual revenues losses causing the Treasury to lean excessively on Central Bank liquidity to finance its deficit, which continuously expanded to 11.1 percent of GDP in 2020 and to 12.2 percent of GDP in 2021, from 9.6 percent of GDP in 2019.
It also bloated the public debt to GDP to 100.6 percent and 104.6 percent in the two years respectively from 86.9 percent in 2019, plunging the country into a deeper debt crisis.
The interim budget for 2022 aims to trim the budget deficit to 9.8 percent of GDP with a medium term aim to bring it down towards 3.5 percent of GDP in 2025 with a primary surplus of 2.3 percent of GDP, an extremely ambitious target to be achieved.
Meanwhile, on the expenditure side, Sri Lanka managed to keep the increase in total expenditure below the rise in revenue at 21.8 percent.
The recurrent expenditure rose even below at 19.9 percent to Rs.1,571.6 billion compared to the same period last year while the capital and lending minus repayments rose by 35.8 percent to Rs.250.5 billion.
The interim budget re-allocated Rs.300 billion worth of capital expenditure identified as less priority ones into providing relief to those affected by the economic crisis.
In the six months, the overall budget deficit expanded to Rs.902.7 billion from Rs.780.2 billion in the corresponding period of last year.
Govt tax revenue rises to over Rs 790 billion owing to new reforms
UNHRC for the first time in history cites ‘economic rights’ of Sri Lankan people: Opposition Leader
The United Nations Human Rights Council’s (UNHRC) session, which is currently being held in Geneva, Switzerland, has prioritised the economic rights of the people of Sri Lanka for the first time in history, reminded Leader of the Opposition Sajith Premadasa, speaking to the Samagi Jana Balawegaya (SJB) Authority Board Meeting in the Kolonnawa Electorate, Colombo organised by Party Spokesperson MP S.M. Marikkar.
The people of this country drove out the Rajapaksas through a people’s struggle, but what has happened today is that a gatekeeper who protects them has come to power, he noted, alleging that the United National Party (UNP), a political force that once served the people of this country big time, has completely been sold out to the Rajapaksas now.
The intelligent people of this country should think carefully whether the relevance of the famous slogan “Hondata Thibba Ratak, Api Wetichcha Thenak” (The Country That Once Was Glorious Has Fallen) shouted out by certain parties on political stages in 2019 resorts to the present or the past, Premadasa emphasised.
He revealed that during the Good Governance regime, he was invited on multiple occasions to accept the premiership, but denied in the stronghold of being loyal to his then leader, who was Ranil Wickremesinghe the then Prime Minister of Sri Lanka.
Premadasa claimed that his policies have never changed since then, adding that today, he holds no expectations of accepting the presidency or the premiership by betraying the genuine struggle of the people of this country on the same ground.
MIAP
Sri Lanka’s private hydro power sector risks an imminent shutdown
Sri Lanka’s privately owned hydro power sector risks an imminent shutdown with virtually all cash-flows drying up as a result of Ceylon Electricity Board’s failure to honour payments to the tune of Rs.20 billion to hydro power developers over the past 11-month period.
“The total outstanding for the mini hydro sector since October 2021 is over Rs.20 billion and already one plant with 0.9 MW capacity has been forced to shut down due to cash-flow issues,” Sri Lanka’s Small Hydro Power Developers Association (SHPDA) President Thusitha Peiris said.
He was addressing the association’s 15th Annual General Meeting (AGM) last Friday.
Sri Lanka’s power sector regulator, Public Utilities Commission, had imposed a condition to CEB to settle the payment arrears to renewable energy developers within a 03-month period when granting approval to increase electricity tariffs.
Although, CEB had reached an agreement with mini hydro developers to settle Rs.100 million on a daily basis, Peiris noted that CEB is yet to honour this arrangement.
In this backdrop, hydro power developers are faced with a severe financial strain in sustaining their operation as they are struggling to settle their project loans to banks while meeting operational costs.
Around Rs.30 billion worth loans by the sector have been classified as non-performing by banks due to non-payment over the past few months. As a result of this, Peiris pointed out that much of the developers have lost access to working capital through the banking sector.
“Our industry has never gone through such a crisis before. The main problem is sourcing working capital,” he said.
The association highlighted that CEB’s failure to honour its payments on time to renewable energy developers has created a dark cloud on future investments in the renewable energy sector.In addition, the developers are also impacted by the current high interest rate regime.
While welcoming the government’s decision to revise the feed-in-tariff (FIT) for renewable energy projects through a committee, the association requested the government to increase the current tariff rate for over 15 mini hydro plants in operation in line with the existing financial parameters.
With an installed capacity of 440MW, private-sector owned small and medium hydro power plants play a crucial role as one of the most reliable and cheapest power suppliers to the CEB.
SL still awaits for compensation of at least US$ 10 billion for X-Press Pearl sinking
More than a year since the sinking of the cargo ship the X-Press Pearl , Sri Lanka still continues to clean its beaches of the plastic pellets that the vessel was carrying, and is still trying to claim compensation for the environmental damage.
Auditor General Chulantha Wickramaratne has called for a full investigation into the process of obtaining compensation for environmental damage caused by the sinking of the X-Press Pearl ship last year, according to official sources.
A Maritime law expert said Sri Lankan authorities have taken a long time to file for compensation and are reluctant to go through years of strenuous legal battles in international courts.
Sri Lanka has obtained an interim payment of $3.7 million in damages, but the country could claim as much as $5 billion to $7 billion.
With Sri Lanka currently mired in the worst economic crisis in the country’s history, those higher numbers would prove a much-needed injection of foreign currency.
But further delays would diminish the cash-strapped island’s chance of getting sufficient compensation for the environmental damage
Meanwhile, Environmental Scientist Hemantha Withanage said Sri Lanka could claim as much as US$ 10 billion as compensation.
Laboratory tests conducted on samples of plastic pellets collected from the beach had revealed a high concentration of harmful chemical compounds such as Bisphenol and Polycyclic Aromatic Hydrocarbons, Withanage said.
“Both these chemical compounds remain in the environment for a long time, resulting in bioaccumulation.
The scope of our tests was limited due to financial constraints, but there can be more such toxic chemical compounds in the debris. People are not aware of the danger,” he added.
Withanage had also spent time and resources to rescue the crew on board the distressed vessel, douse the fire, and mitigate environment
“The Marine Environment Protection Authority (MEPA) and the AG’s Department have not taken legal action and we may ultimately lose the opportunity to do so,” he alleged, calling for a Presidential Commission of Inquiry to investigate the matter.
He said two petitions had been filed in the Appeal Court and another petition in the Supreme Court over the X-Press Pearl disaster.
The ill-fated ship was carrying 81 containers of dangerous goods and contained 25 tons of nitric acid.The affected area encompasses 746 km from Mannar to Kirinda Hambantota.
An expert committee investigating the extent of damage to the country’s marine and coastal environment has now concluded the disaster to be the worst in terms of chemical and plastic pollution of the sea.
That’s according to Ajith de Alwis, co-chair of the X-Press Pearl damage assessment committee and a professor of chemical and process engineering at the University of Moratuwa.
The committee has submitted its assessment report to the Attorney General’s Office for use in claiming compensation from the Singapore-based operators of the ship.
“However, the report is only the first edition of the damage assessment, and further assessments would continue based on the monitoring,” De Alwis said
Vijitha Herath joins ‘Nidahasa Janatha Sabha’ led by Alahapperuma
Eng. Vijitha Herath, a former Chairman of the Ceylon Electricity Board (CEB), the Sri Lanka Insurance Corporation (SLIC) and the LITRO Gas Company, has joined the ‘Nidahasa Janatha Sabha,’ a political faction separated from the Ruling Party Sri Lanka Podujana Peramuna (SLPP) and rechristened led by MP Dullas Alahapperuma.
Herath also served as the Chairman of the Podujana Engineers’ Front affiliated with the Ruling Party, and accordingly has left his duties in order to join Alahapperuma’s new political movement.
His coming has been welcomed by Alahapperuma, Prof. G.L. Peiris, Charitha Herath and other MPs separated from the SLPP and joined the new party, at the Party Office in Nawala yesterday (19).
MIAP
Approved Power Interruption Schedule reveals change in daily power cuts
A power cut of 01 hours and 20 minutes will occur today (20) and tomorrow (21), revealed the Public Utilities Commission of Sri Lanka (PUCSL).
Earlier, the daily power cuts were limited to only a period of one hour.
MIAP
Sri Lanka Original Narrative Summary: 20/09
- Transport Minister Dr Bandula Gunawardene says Sri Lanka is the “safest tourist destination” at present: asserts that a “mistake” was made when arresting the Aeroflot aircraft, and that it will not happen again.
- Opposition Leader Sajith Premadasa says the UNP has been “sold out” to the “Rajapaksa clan”.
- Global Tamil Forum says Tamil people who have suffered enormously during the war, have been consistently provided much needed hope by the UNHCR: calls for a strong resolution against Sri Lanka at the UNHRC in Geneva.
- Cement usage plunges 19% in 6 months to June 2022 YOY: reflects massive contraction in construction activities which accounts for about 10% of GDP.
- UN Resident Coordinator Hanaa Singer appeals to Sri Lanka’s friends to show solidarity: urges donations to provide food security and medical supplies: says gains in health care, education and poverty alleviation are threatened by the current crisis.
- Teachers’ Union Leader Mahinda Jayasinghe demands a special monthly allowance for government employees: says normal monthly expenditure of a person has increased from Rs.63,000 to Rs.110,000 this year.
- World Bank says Sri Lanka is among the top 10 countries with the highest food inflation.
- Government revenue in the 1H22 reaches Rs.918 bn, up from Rs.714 bn last year: expenditure and net lending in 1H22 also rises to Rs.1,820 bn, compared to Rs.1,500 bn, an year ago: bulk of the increase in expenditure due to very high interest cost consequent to the massive increase in Central Bank’s policy rates on 8th April 2022.
- Small hydro power developers warn of increased duration of power cuts and a further 100% increase in electricity tariffs, if the country loses the contribution of its non-conventional renewable energy sector.
- Group of Buddhist priests urge Buddhist temples to turn off lights and leave temples in darkness on the upcoming Vap Full Moon Poya Day, in protest against the increase in electricity tariffs.
Mobile signature campaign against PTA! (PHOTOS)
A mobile signature campaign against the controversial Prevention of Terrorism Act (PTA) reached Anuradhapura yesterday (19) morning and reached Puttalam in the afternoon.
The campaign is endorsed by the Clergy, MPs including Shanakiya Rasamanickam and M.A. Sumanthiran, political activists and other civil movements.
The campaign was launched in Kankesanthurai, Jaffna and is scheduled to travel across the country before it ends in Hambantota on October 05.
Hindi Diwas celebrations in Sri Lanka
Hindi Diwas was celebrated on 14 September 2022 with great zeal and fervour at the Swami Vivekananda Cultural Centre (SVCC), cultural arm of High Commission of India, Colombo. High Commissioner Gopal Baglay was the Chief Guest at the event, which saw participation of around 75 Hindi enthusiasts, scholars, teachers and students from all over Sri Lanka. Guests at the event were welcomed with a traditional Kandyan dance. Several musical performances on Bollywood and Sinhalese songs, highlighting the close cultural ties between India and Sri Lanka, were also showcased.
2. Speaking on the occasion, the High Commissioner highlighted the role of Hindi language and literature in strengthening millennia-old cultural, linguistic, literary, and religious ties between India and Sri Lanka. He also elaborated at length on the importance of lighting the traditional lamp and Saraswati vandana, both of which are testimonies of civilization linkages between “cultural twins” – India and Sri Lanka.
3. On this occasion, a group of 18 Sri Lankan students who have been offered Government of India scholarships to study Hindi in India were also felicitated. As a part of the scholarship, the visit of the students, academic fees and local hospitality at Kendriya Hindi Sansthan (KHS) or Central Institute of Hindi, Agra for one year will be fully sponsored. High Commissioner interacted with the selected students, who departed to India on 15 September 2022 and conveyed his best wishes for their stay in India.
4. Hindi students of the Centre who have successfully completed their KHS courses were also honoured during the Hindi Diwas celebrations.
5. In commemoration of the Hindi Diwas, SVCC launched several island-wide competitions, such as Hindi essay writing competition, Hindi storytelling competition, Hindi poem recitation competition, and Hindi Solo singing competition. These competitions focus on promoting Hindi by providing a platform to Hindi enthusiasts in Sri Lanka to express their literary and linguistic talents. The competitions are being organized throughout the month of September 2022.
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Colombo
19 September 2022
US Ambassador fascinated by ‘dangerous peacocks’ in Sri Lanka
US Ambassador to Sri Lanka Julie Chung left a social media remark expressing her surprise on the existence of peacocks in Sri Lanka, during a her visit to the Southern Province in the country today (19).
Ms. Chung visited several areas in the province, and her tour included the visiting of a group of young people in Matara and the University of Ruhuna.
During her visit, she saw a name board with the words, “Danger, Peacocks Ahead,” which made Chung wanting to see ‘dangerous’ peacocks living in the country.
“I’d never imagined a dangerous peacock, but now I can’t stop looking for them!” Chung wrote on her Twitter handle.
Her comments were replied with many twitter handlers across the country saying that she misunderstood the meaning of the name board, because it is a sign to protect the wildlife in the area from the vehicles travelling on the road, while some found it amusing referring the ‘dangerous peacocks’ she is mentioning to Sri Lankan politicians.
MIAP