Expert advice on tax regime

The Government’s new tax regime has led to protests not only by high income earning professionals but also by Trade Unions.In my view the problem is not with the rate of taxation which is 6% – 36%, but with the tax exemption threshold. Due to hyper-inflation and the high cost of electricity, water, essential food items etc, the Exemption Threshold of 1.2 million per year is far too low.

If the Exemption Threshold is increased to at least 1.8 million per year, the Trade Unions are likely to accept this. It will also lessen the burden of taxation on high income professionals. And it should not impact on the IMF agreement.

The time has now come for a compromise between the Government and the protesters.

N.L.Mendis
(The writer is a retired Commissioner General of Inland Revenue)