Published on: February 7, 2023

Personal income taxation is a short-term economic development strategy

– Dr. Kapila Senanayake, Director General of the Financial Policy Department, informs Union leaders and representatives of civil organizations

According to Dr Kapila Senanayake, Director General of the Department of Financial Policy, the tax on personal income was imposed as a short-term strategy to resurrect the country from the existing economic situation, and this new tax system in Sri Lanka is of a meagre percentage compared to other Asian countries.

Mr Senanayake also stated that there is an opportunity to discuss short-term strategies to provide some relief by considering trade union leaders’ and civil organization representatives’ views and suggestions on the new tax system.

According to the instructions of the President’s Secretary Saman Ekanayake, a meeting was held yesterday (06), presided over by the President’s Trade Union Director General Saman Ratnapriya and the Director General of the Financial Policy Department Mr Kapila Senanayake, to inform the trade union leaders and representatives of civil organizations regarding the new tax policy on earnings. These details were made public during the event, which was hosted at the Finance Ministry Auditorium.

According to Mr Saman Ratnapriya, the new tax policy that is assessed at the time of earning has created difficulties for government and semi-government employees, and as a result of the issues they have experienced, they have responded professionally. It was also made clear that the main goal of this conversation was to gather concepts and recommendations to find solutions to the current issues.

Mr Ratnapriya also stated that these conversations will result in swift short-term solution recommendations that may be taken to address the difficulties that have emerged. These quick short-term solution proposals will be presented to the President and the Prime Minister.
Dr Kapila Senanayake, Director General of the Department of Financial Policy, spoke at the event and explained in great detail about the government’s revenue, government spending, and financial strategies used to reduce the annual budget deficit. He also mentioned that Sri Lanka has a very low percentage of personal income taxation when compared to other Asian nations.

Dr Kapila Senaratne further explained the financial situation in Sri Lanka, problems of personal taxation, tax reforms related to personal income tax, the basis for increasing personal income tax and the implications of tax reforms.

In addition to outlining numerous tax rules, Senior Deputy Commissioner of the Department of Inland Revenue Mr K.K.I. Eranda also described how taxable personal income is calculated as per the new tax law.

The trade union leaders who took part in the discussion stated that there are issues with the new tax policy’s tax system that is imposed on personal income and that the trade unions should be consulted before creating the tax policy.

The trade union leaders further demanded that fair services be given to the public for the taxes levied like in other countries, and prompt solutions should be provided to reduce the inconvenience the professionals face due to the new tax act faces.

Inland Revenue Department Deputy Commissioner W.M.G. Kumaratunga, Tax Adviser, Fiscal Policy Division of the Ministry of Finance, Tanuja Perera Prime Minister’s Trade Union Secretary, Chandraratne Pallegama, trade union leaders, representatives of civil organizations and several others attended the event.


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