Protesters in Sri Lanka demand reduction in already meager taxes
2023.02.08 08:57
Protesters in Sri Lanka demand reduction in already meager taxes
By Ray Johnson
Budrigannews.com – The president of Sri Lanka said on Wednesday that the country’s economy is expected to start growing again at the end of the year and that the government hopes the country will be out of its economic crisis by 2026. This came as hundreds of people protested a recent increase in taxes amid high inflation.
The 22 million-person island is experiencing its worst economic crisis since it gained independence from Britain in 1948. As a result, it has been forced to default on loans and seek a $2.9 billion bailout from the International Monetary Fund (IMF).
Sri Lanka introduced new income taxes for professionals in January, ranging from 12.5% to more than 36%, in order to increase government revenue to 11.3% of GDP this year from 8.3% in 2022.
After Gotabaya Rajapaksa was ousted in a popular uprising in July, President Ranil Wickremesinghe took office and told parliament that he could see a way out of the problems as he worked through economic reforms to seal the deal with the IMF.
He stated, “It is difficult for all segments of society to survive.” However, we can find a solution if we endure this difficulty for another five to six months.
He went on to say, “We can rise out of bankruptcy by 2026” or even earlier if all political parties supported government initiatives like tax increases, “We can achieve economic growth” by the end of 2023.
After shrinking by 11% the previous year, Wickremesinghe stated last month that the economy could contract by 3.5% or 4.0% for the entire year.
A lunchtime protest by salaried workers was little deterred by his speech to lawmakers.
Protesters walked out of government buildings carrying black flags and signs that read “Yes to reasonable tax” and shouting slogans. Outside the primary hospital in Colombo, black flags were also fastened to railings.
On Wednesday, teachers and doctors at state-run hospitals and universities began a 24-hour strike in anticipation of longer ones.
Ranjan Jayalal of the United Trade Union Alliance, which represents employees of the state-run Ceylon Electricity Board, stated, “We have taken to the streets to tell this government that they must immediately and unconditionally withdraw these unfair taxes.”
“We will make this government kneel and force them to cancel this tax bill if they don’t do that.”
According to Wickremesinghe, Sri Lanka’s foreign reserves have increased to $500 million from zero last year.
At the end of January, total reserves reached $2.1 billion, the highest level in roughly a year. However, a $1.5 billion swap from the People’s Bank of China cannot yet be tapped because core reserves are insufficient to support imports for three months.
Wickremesinghe stated that China, Sri Lanka’s largest bilateral lender, was working with the country to obtain financing assurances for a debt restructuring in order to complete an IMF program.
He continued:
“We have received positive responses from all parties.” We are currently attempting to unite China’s and other nations’ approaches.”
