Eran proposes raising PAYE threshold to Rs 200,000 a month

By Rathindra Kuruwita

Historically, Sri Lankan governments have failed to reduce the budget deficit, SJB MP Eran Wickramaratne says.

Sri Lankan governments have consistently looked at maximising revenue but paid minimal attention to curtailing expenditure, MP Wickramaratne has said.

Even the International Monetary Fund (IMF) had not factored in state expenditures when the latest bailout programme was designed, he said.

Compared to the 2022 budget, state expenditure had increased by 47 percent for 2024, Wickramaratne said.

“The expenses are about 11 percent higher compared to the 2023 budget. The total expenses of 2022 were Rs. 4.473 billion . The 2023 budget set the state expenses at Rs 5,854 billion. This has increased to Rs 6,563 billion in 2024,” he said.

The SJB MP said that during a crisis, the country must first curtail expenses.

“We must also look at how the government is spending our money. We have borrowed money and invested in things that will only make profits in the long term. For example, airports, ports, cricket stadiums and highways. It is not that these are important, but we have not been spending our savings on these projects, we have borrowed. And we have borrowed from foreign sources. We should have focused on trade and investments with the borrowed money,” he said.

There was a proposal to establish a budget office, he said. This has also been approved by parliament, the SJB MP said. However, the budget office has not been established in parliament yet, Wickramaratne said.

“We have always taken decisions thinking of elections. The current president was not selected in a national election. He is also the finance minister. He was ushered in due to the upheavals of 2022. If he can, for a moment, forget about elections, he can get the economy back on track. He could have presented a long term budget because it will take years to end this crisis. He can lay the foundation for economic recovery. But this was an election budget,” he said.

The SJB MP said the government has allocated 20 percent more funding to pay interest compared to 2023. Sri Lanka’s debt payment installments are about 72 percent of its annual revenue, he said.

“We are leading the world on this front. We need to stabilise the economy, and we need to get back on a growth trajectory. We can do this by taxing ourselves alone. People have no money to invest. We must increase the threshold for PAYE tax to 200,000 rupees a month,” he said.

Given that there are no domestic savings, Sri Lanka needs to attract a large number of foreign investors, Wickramaratne said. However, trust in Sri Lanka is low at the moment, he said.