Samagi Jana Balawegaya MP Kabir Hashim says the new proposed tax policy is a death sentence to various groups including small and medium-scale enterprises, the local business industry, the export industry as well as private sector executives. According to Hashim, the new policy will deal a death blow to the local production industry. “They are attempting to sign off on a death sentence to many,” he said.

Hashim made these comments during a joint press conference held in Colombo yesterday.

“It is evident that no analysis has been carried out regarding this new tax policy as to what can or cannot be done in the economic environment of this country. For example, while a 36 per cent tax has been levied on top-tier earners, taxes on SMEs have been increased from 14 per cent to 30 per cent. A similar increase has been announced to those involved in the export industry” he noted. “But at the same time, an Indian company was given a special tax relief last week claiming it was a strategic development tactic,” he added.

Noting that taxes on locals such as IT professionals earning in dollars have been increased, Hashim said foreign investors have been granted tax reliefs. “Where is the consistency in this process? Is there any fairness?” he asked. He also questioned the government’s intention to levy taxes on certain top-tier earners such as private-sector executives to apply retrospectively. “It is questionable as to how practical this is.” Hashim said.

Noting the various obstacles faced by SMEs recently with the inability to import inputs due to the forex crisis as well as the increased costs, Hashim said it is unclear if the government understands its true responsibility. “The IMF is a facilitator. The government need not agree to all of its conditions. These are up for discussion. Not all of their policies work for our country” he said.

“It is the government's responsibility to find out how we can reduce public expenditure, increase revenue, identify the areas of revenue generation and how to do it in a way that does not hinder our national production. But the government has failed in this task. It has done this kind of analysis in an informal manner without recognizing the situation on the ground.” he added.

Hashim accused the government of blindly following all proposals made by state sector officials and the IMF which will eventually destroy the country. “There is no political leadership to take necessary astute decisions,” he said.

According to him, instead of widening the tax net, those who are already paying taxes are being burdened further through the proposed reforms. “Theoretically, it could have been done without hurting our industrial sector, the local production sector and regular taxpayers. Therefore, our opinion is that the tax policy brought by this government without any proper analysis or into the ground situation is unjust and will be a failure.” he predicted.