Employee who draws Rs. 200,000 per month now has to pay only Rs. 1,700/- as tax: Bandula

The PAYE tax payable by an employee who draws Rs. 200,000 a month is Rs. 7,500. His savings stands at Rs. 5,800 from the current fuel and gas price reduction. As such, he or she has to pay only Rs. 1,700 as payee tax, Cabinet Spokesman and Mass Media Minister Dr Bandula Gunawardana said yesterday.

The trade gap of Sri Lanka between 2001 – 2007 stands at US$ 25.5 billion and the IMF wants to minimize this to a manageable level by 2028 by improving the dollar and rupee account of the Government, he added.

The PAYE tax hike of public and private sector employees and divestment of State Owned Enterprises (SOEs) are aimed at improving the State revenue to 20% from the current 8% but with economic recovery, the benefit would be passed onto the Public Servants, he added.

Addressing the weekly post-Cabinet news briefing Minister Gunawardana said the Sri Lanka Government had agreed to the IMF to raise the State revenue through tax hikes and divestment of SOEs and therefore the Government is committed to carrying out these reforms to obtain the Extended Fund Facility (EFF) of US$ 2.9 billion.

“If Sri Lanka failed to honour the agreement, we will not get the second tranche of the EFF. However, the Government expects to lower the current tax ratio at the first instance of the economic recovery.

Responding to a journalist, Minister Gunawardana said the Government was in the process of passing the benefits of the price reduction of gas and oil in the global market.

The reduction of the price of a 12.5 KG domestic gas cylinder by Rs. 1005, a litre of diesel by Rs. 80, super diesel by Rs. 45, octane 95 petrol by Rs. 135, octane 92 by Rs. 60 and kerosene by Rs. 10 will bring down the cost of living and contribute to reducing prices of consumer goods drastically, he stressed