- 450K-500K earners to be taxed 25% PAYE
- Emphasises increasing tax threshold to dissuade people from leaving SL
A Samagi Jana Balawegaya (SJB) Government would increase the maximum tax rate under pay-as-you-earn (PAYE) tax to over 40% for high-income earners while maintaining a 25% tax rate for Rs. 500,000 monthly income, SJB MP Dr. Harsha de Silva said.
Speaking to the media on Tuesday (14), he said that the SJB is not objecting to the amount of taxes imposed as per the direction of the International Monetary Fund (IMF) but to the humanity in charging those taxes from the public.
“We believe for those who earn at least Rs. 450,000 to Rs. 500,000, we should be able to maintain a PAYE tax rate of around 24-25%,” he said.
He noted that a graduated software engineer starts a job at around $ 1,000 monthly (or close to Rs. 400,000) in Sri Lanka which will gradually increase with the employment period and could end up at about $ 6,000.
“They can go to any country in the world and do that job; they don’t have to stay in Sri Lanka, so we should look at how to keep them in Sri Lanka,” Dr. de Silva said.
Therefore, he said the tax rates should be brought down from the current tax slabs while high-income earners should be taxed at a higher rate to around 39-40% based on their calculation, which could also include a surcharge.
Also, speaking to The Daily Morning Business earlier this month, SJB MP Eran Wickramaratne said that an SJB Government will renegotiate the Personal Income Tax (PIT) minimum threshold with the IMF and bring it up to Rs. 250,000.
According to the current PAYE tax structure, the Government charges a maximum tax rate of 36% from people earning a monthly income of more than Rs. 310,000.
Moreover, the opposition MP said that the SJB has alternatives to earn more revenue than what the Government has planned to earn through the recent reforms.
He also claimed that around 1.1 million persons have registered to pay PAYE while the Government said that only around 120,000 has paid PAYE.
Last week, State Minister of Finance Ranjith Siyambalapitiya said that only 2.6% or 120,925 out of the 4.64 million total workforce in Sri Lanka is subjected to PAYE.