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‘Incentivising migrant workers at the expense of taxpayers’ money’

20 May 2022

  • Nandalal notes migrant workers do not pay tax
By Imesh Ranasinghe  Using Sri Lankan taxpayers’ money to incentive migrant workers to send their remittances into the country is a wrong policy, stated Central Bank of Sri Lanka (CBSL) Governor Dr Nandalal Weerasinghe. Speaking to the media yesterday (19), he said that the CBSL has provided incentives for remittances, while more requests are made from the Treasury for various further incentives to be implemented, which are still being considered by the Central Bank. “But according to my personal opinion, there is no need to provide incentives for remittances sent by migrant workers, using taxpayers’ money,” he added. The CBSL Governor said that this is a wrong policy to follow, because the migrant workers do not have to pay any taxes in Sri Lanka for the money they send to their families, while people earning in Sri Lanka have to earn money for their families and pay taxes to the Government. “So using the taxpayers’ money to pay incentives to migrant workers is a wrong policy,” he said. Therefore, he said, the CBSL and the Treasury could look into an alternative, such as providing a duty-free allowance to migrant workers for the remittances. However, Dr. Weerasinghe said that giving an allowance to every migrant worker means the Government is using taxpayer money on migrant workers, instead of using them for the people in Sri Lanka. Also, he noted that some of the Sri Lankans working abroad are requesting duty-free car permits from the Government to send their foreign exchange to the country. In December 2021, the Monetary Board of the Central Bank under former Governor Ajith Nivard Cabraal decided to pay an incentive of Rs. 8.00 per US dollar for workers’ remittances, in addition to the existing incentive of Rs. 2.00 at that time to pay a total of Rs 10 extra per US dollar under the “Incentive Scheme on Inward Workers’ Remittances” with the intention of attracting remittances to the banking system from the black market. But this scheme failed to produce any result as the gap between the CBSL exchange rates and black market rates increased giving a much higher premium for the dollars converted via the black market, the remittances fell from $ 478 million in June 2021 to a record low of $ 208 million by February 2022. The scheme continued until March 2022, the time the CBSL allowed flexibility in the exchange rate.  


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