Dr. Harsha de Silva, an opposition Member of Parliament, has put forth a comprehensive proposal for an alternative tax structure aimed at easing the tax burden on the middle class while increasing overall tax revenue. In his proposal, he outlined a simplified Pay As You Earn (PAYE) tax structure that could potentially generate significant revenue for the government.

Dr. de Silva's proposal begins with a fundamental commitment to alleviate the tax burden on the middle class and professionals. He pointed out the success of the current tax system, stating that it has exceeded expectations by collecting over LKR 100 billion per year. As of the end of September, LKR 107 billion had already been collected, with the potential to reach LKR 125 billion by the year's end, assuming a 70% compliance rate.

The core of Dr. de Silva's proposal is a simplified PAYE tax structure that starts at 6% for individuals with incomes over LKR 150,000. The tax rate would then increment by 4% for each LKR 50,000 income slab, up to LKR 250,000, with a maximum tax rate of 24% for those earning LKR 500,000 or more. This revamped structure is estimated to raise approximately LKR 83 billion.

To bridge the revenue gap and maintain fairness, Dr. de Silva suggests introducing a 15% surcharge on monthly salaries exceeding LKR 750,000. He emphasizes that this surcharge is not an additional tax but rather a crucial step to rebalance the tax system.

Additionally, the proposal addresses issues related to excise tax evasion, targeting an estimated LKR 60 billion in unpaid taxes. Dr. de Silva's proposal seeks to ensure fairness and transparency within the tax system.

The opposition MP asserts that this plan can effectively close the revenue gap, and he is ready to discuss two more alternative proposals with the government. He believes that creating a fairer tax system will not only alleviate the middle class's burden but also help retain skilled professionals in the country, ultimately benefiting the nation's economy.