Sri Lankan President Ranil Wickremesinghe in an address to the parliament on Tuesday (18) announced a new wealth tax initiative aimed at addressing rental income while ensuring the vast majority of homeowners remain unaffected.
Emphasizing the high threshold for the tax, the President reassured citizens that around 90 percent of homes would be exempt.
“I just want to tell the House in regard to the rental income. We are going to have a wealth tax, and there will be a very high threshold. So don’t worry, your house is safe,” the President stated.
The President explained that the decision to focus on rental income was a strategic move to navigate constitutional challenges associated with provincial council revenues.
“So, this was based on rating. Then we came up with a problem. Rates belong to the provincial council. So if we go on the rating business, there is a possibility that the court can say that this money belongs to the provincial council. So we want to get it here. So we have used a different formula called rental income. Your income tax belongs to the central government. It’s the same. You generally have used the ratings. But to get over the constitutional issue, that we have done this,” the President elaborated.
Reiterating the high threshold for the tax, the President assured that most citizens need not worry about their primary residences being taxed. The new wealth tax, according to the President, targets a small, affluent minority.
“But it’s going to have a very high threshold. And I don’t think the vast majority of the people in this country should even be worried about their house. So that’s all. But we will have to get on to wealth tax. I know SJB is very, very worried that their billionaires who are with them will get taxed. But nevertheless, this is the reason for it,” he said.
