Despite receiving criticism on an earlier occasion, Finance Minister Ravi Karunanayake has again reiterated that the one-off taxes introduced in the 2015 interim Budget were imposed targeting companies that had made undue gains through political backing. The Minister made this observation during an interview with US-based television channel CNBC last week.
The new Government in its interim budget had imposed three one-off taxes, namely the Super Gain tax, a tax of Rs.250 million from each telecommunication service provider, and a one-off tax of Rs.1 billion on companies offering satellite direct-to-home (DTH) TV with more than 50,000 subscribers.
“There were some companies that had political patronage, and as a result, they were making undue gains at the expense of Sri Lankan economy. So it was not something we went on retrospective effect taxation, we only targeted certain companies that had made a fair amount of money from more or less political patronage,” Karunanayake said.
However, Karunanayake’s earlier statement that the one-off Super Gain tax was imposed on companies that had ill-gotten wealth received flak from the business community.
The Chairman, Ceylon Chamber of Commerce, Suresh Shah had reportedly stated that such a statement had created a wrong perception that all businesses had ill-gotten wealth.
He further stated that the public debt which was thought to be Rs.7.3 trillion ended up at Rs.8.9 trillion. “The government revenue which was forecasted at Rs.1533 billion finally was looked at around Rs.1400 billion. So as a result, we basically had to shift from a regressive taxation system and revenue distribution to a more progressive system,” he said.
He further pointed out that 35 companies out of 72,000 had come under the category for the particular taxation and added that the majority of them had accepted it in good spirit. “We targeted to get Rs.90 billion rupees, which I’m sure, many of the companies have accepted in good spirit,” he added.