VAT hike necessary to fund salary increase demanded by striking government employees – Secretary to the Treasury

Secretary to the Treasury Mahinda Siriwardana stated that granting the salary increase demanded by striking public servants would necessitate raising the current VAT from 18% to between 20% and 21%. but reiterated that the government cannot impose such a burden on the public. Siriwardana made these remarks during a discussion held today (08) at the Presidential Secretariat, chaired by President Ranil Wickremesinghe, concerning the demands of public service trade unions.

The discussion addressed the trade union actions taken by several trade unions in the public service and explored potential positive solutions to their demands. It was noted that while a salary increase is not feasible this year, there is a plan to revise public service salaries in the 2025 budget, based on recommendations from an expert committee investigating salary disparities.

The Treasury Secretary highlighted that a salary increase of Rs. 10,000 for government employees would require an additional Rs. 140 billion annually, and an increase of Rs. 20,000 would necessitate an additional Rs. 280 billion.

To generate the required income, even with optimal management of current revenues, additional tax increases will be necessary. The Treasury Secretary pointed out that to raise salaries by Rs. 10,000, the VAT would need to be increased by 2%. Furthermore, to meet the wage demands of the trade unions, the VAT would need to be raised by more than 3%. He emphasized that this is not feasible at this time, as the VAT is already at a maximum rate of 18%.

The Treasury Secretary also explained that, due to the government’s efforts to stabilize the country’s economy, the Central Bank can no longer print money as it did before. Doing so would jeopardize the program with the International Monetary Fund.

Senior Advisor to the President on Economic Affairs, Dr. R.H.S. Samaratunga, remarked that while increasing public servants’ salaries again this year is challenging, the President has committed to allocating funds for this in next year’s budget. He also mentioned that a separate expert committee has been appointed to study and report on salary discrepancies.

 

  • Related Posts

    Turkish Naval Ship TCG Kinaliada departs island concluding formal visit
    • July 12, 2024

    TCG Kinaliada of the Turkish Naval Forces, which arrived in Sri Lanka on 09th July 2024, departed the island today (12th July), on successful completion of her formal visit. The…

    Continue reading
    Parnida Ranasinghe Jr swears in as new AG
    • July 12, 2024

    Parinda Ranasinghe P.C., was sworn in as Attorney General by President Ranil Wickremesinghe in terms of Article 61E (b) of the Constitution of Sri Lanka at the Presidential Secretariat. The post…

    Continue reading

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    You Missed

    වැඩි ලකුණු ඇති තණ­තිලි අපේ­ක්ෂා­වෙන් එල්පී­එල් කණ්ඩා­යම් කොළ­ඹට

    • By
    • July 13, 2024
    • 19 views
    වැඩි ලකුණු ඇති තණ­තිලි අපේ­ක්ෂා­වෙන් එල්පී­එල් කණ්ඩා­යම් කොළ­ඹට

    ශ්‍රී ලංකා-එංග­ලන්ත යොවුන් සිව්දින තර­ගය ජය පැර­දුම් නෑ

    • By
    • July 13, 2024
    • 17 views
    ශ්‍රී ලංකා-එංග­ලන්ත යොවුන් සිව්දින තර­ගය ජය පැර­දුම් නෑ

    කවීෂා එගො­ඩගේ සම­ඟින් එමීර් පිල ශ්‍රී ලංකා­වට

    • By
    • July 13, 2024
    • 18 views
    කවීෂා එගො­ඩගේ සම­ඟින් එමීර් පිල ශ්‍රී ලංකා­වට

    ක්‍රීඩි­කාවෝ දෙදෙ­නෙක් එකම වාර්තාව අබි­බවා යති

    • By
    • July 13, 2024
    • 19 views
    ක්‍රීඩි­කාවෝ දෙදෙ­නෙක් එකම වාර්තාව අබි­බවා යති

    ඇන්ඩ­ර්සන් යන්නම යයි

    • By
    • July 13, 2024
    • 18 views
    ඇන්ඩ­ර්සන් යන්නම යයි

    නිව්ස්ටාර්-චැලෙ­න්ජර්ස් අව­සන් මහා තර­ගය ඉරිදා

    • By
    • July 13, 2024
    • 17 views
    නිව්ස්ටාර්-චැලෙ­න්ජර්ස් අව­සන් මහා තර­ගය ඉරිදා