Eran slams SLPP over move to impose 25% tax on EPF profits

The government has decided in an unprecedented manner to impose a 25% surcharge on the income of the Employees’ Provident Fund (EPF), which has never been taxed in the history of Sri Lanka, and the Opposition is totally opposed to the new tax, says MP Eran Wickremaratne at a press conference held at the Opposition Leader’s Office early this week.

Wickremaratne said that about 1.8 million members of the fund spent what they received as benefits on their family needs after retirement. Mostly employees deposit that money in a bank account and depend on its interest to meet their needs in the evening of their lives. The Yahapalana government decided to pay a maximum of 15% interest on the money in the accounts of these senior citizens with the intention of providing relief to those who have served the country.

Wickramaratne said that the Opposition opposed subjecting the EPF to such a super gain tax of 25 %. “This government seems to be raising issues that the country does not have in the face of crises it faces. During the 2019 Presidential election there was a campaign in the country that there was a bond scam. A Presidential Commission of Inquiry was also appointed for that purpose. The Presidential Bond Commission had recommended that the bond issue should be further investigated effective from 2002.

“Accordingly, the Monetary Board of the Central Bank has decided to conduct a Forensic Audit investigation with foreign experts on the subject. Five-reports were released two years later, on 07 November, 2019, just days before the 2019 presidential election. Within a week of the release of these reports a new President was elected to office and the Good Governance Government was unable to implement its recommendations.

It has been two years since President Gotabaya Rajapaksa was elected, but he did nothing to take action against the culprits mentioned in the forensic report. The government not only did not initiate investigations but also has put it under the carpet enabling it to avoid taking action against the accused on those reports.

The forensic reports state that the irregularities in EPF fund should be carefully investigated. The second volume of the report explains how the EPF money was invested in bonds and the stock market. It has been found that out of the 142 investments made using Rs. 46.95 billion of EPF money, prior approval has not been obtained for 98 investments. There is a committee to approve such investments and it is illegal to make such investments without the approval of that committee.

“All discussions on transactions made by the Central Bank will be recorded. Though the investigators wanted 1163 such recordings related to this provident fund investment for inspections, only 265 recordings have been submitted. Mr. Wickremaratne pointed out that this proves how the authorities have acted to cover up the theft of transactions.

“Furthermore, EPF has been paid a lower interest rate than the average market value. Investments have also been made in companies that are not in the stock market contravening the regulations that covers the EPF. Rs. 500 million has been provided to SriLankan Airlines. This investment from the employees’ money was made in 2010 before the approval of the relevant investment committee and this was a complete loss to the EPF as there was no return on this investment.

“When the forensic auditors asked the then Governor of the CBSL Ajith Nivard Cabraal to answer a questionnaire on bonds and stock market investments made at a loss to the EPF, the then Governor Cabraal avoided any response and has not responded to a request even for a meeting”, he said.

Wickremaratne accused the present government of protecting the Bond scammers by hiding the five forensic reports on the Bond scam under the carpet.