PARLIAMENT

The Committee on Public Finance Chaired by Hon. (Dr.) Harsha de Silva, approved the Inland Revenue (Amendment) Bill by a majority at the Committee meeting held today (Sep. 07) in Parliament. The majority approval for the said Bill was preceded by discussions at length pertaining to the particulars of the Bill.

Hon. Patali Champika Ranawaka, Member of Parliament and Committee Member abstained from casting his vote.

As the Chair to the Committee on Public Finance, Hon. (Dr.) Harsha de Silva abstained from casting his vote.

The CBSL officials clarified that the 30% tax increase, as stipulated by the Inland Revenue (Amendment) Bill, applies only to the interest income on the bond portfolio. Furthermore, it was highlighted that in the event that superannuation funds do participate in the DDO, this will be reversed to 14%.

The Committee also questioned the ability of the CBSL to guarantee the proposed rate of a 12% return until 2025 and 9% thereafter to the superannuation funds participating in the DDO. In response, the CBSL Governor stated that it is not possible to guarantee the return to each member; however, he assured them that they will strive to achieve the proposed return. He further mentioned that in the event that this rate cannot be maintained, there is an ongoing discussion for the treasury to step in to ensure the proposed return until 2025.

The Committee expressed the opinion that a forthcoming amendment should consider an inflation-adjusted interest rate to guarantee a positive return for EPF members. The CBSL governor also revealed that if the EPF participates in the DDO, the opportunity loss to the EPF bond portfolio is 4%. However, should the EPF choose not to participate, the opportunity loss to the bond portfolio increases to 21% due to the higher tax rate of 30% as per the latest amendment to the Inland Revenue Bill.

Additionally, it was observed that all superannuation funds not eligible for the DDO will be subjected to a 30% tax increase, potentially discouraging the formation of new superannuation funds in the future.

Furthermore, the Committee whilst congratulating the Dr. P. Nandalal Weerasinghe, Governor of the Central Bank of Sri Lanka (CBSL) for being named among the 21 Bank Governors listed in the Global Finance Magazine’s, also commended the efforts of the officials present.

State Ministers Hon. Premitha Bandara Tennakoon, Hon. (Dr.) Suren Raghavan, Hon. (Dr.) (Mrs.) Seetha Arambepola, Hon. Anupa Pasqual, Members of Parliament Hon. Wajira Abeywardana, Hon. Johnston Fernando, Hon. Mahindananda Aluthgamage, Hon. Patali Champika Ranawaka, Hon. Chandima Weerakkody, Hon. Nimal Lanza, Hon. U. K. Sumith Udukumbura, Hon. (Dr.) Major Pradeep Undugoda, Hon. Premnath C. Dolawatte, Hon. M. W. D. Sahan Pradeep Withana, Hon. Madhura Withanage were present at the Committee meeting held.