Murtaza Jafferjee, the Chief Executive Officer of JB Securities Ltd, emphasized the need to avoid “distortion” when implementing tax reform in Sri Lanka. He made these remarks during the two-day Tax Symposium organized by CA Sri Lanka, which focused on macroeconomics, IMF proposals, and the way forward.
Jafferjee highlighted the discrepancy in taxation between diesel and petrol in Sri Lanka, where diesel is taxed at a lower rate while petrol is taxed at a higher tier. He pointed out that in many other countries, diesel is taxed higher and is more expensive than petrol. The argument in Sri Lanka against increasing duty on diesel is that it would negatively impact the transportation sector and various other industries. Jafferjee also noted the “distortion” created by granting tax holidays to specific sectors and suggested the need for uniformity in such policies. As an example, he mentioned the disparity in taxes paid by Lanka Lubricants compared to LIOC in the lubricant business.
The symposium also featured a special segment where officials from the International Monetary Fund (IMF) and the World Bank provided insights into property tax and wealth tax proposals that will be implemented in Sri Lanka based on an agreement between the government and the IMF. Sebastian Beer, an Economist at the Tax Policy Division of the IMF’s Fiscal Affairs Department, shared his views on the impact of property taxation on the Sri Lankan economy. Alastair Thomas, a Senior Economist from the World Bank, delivered a detailed presentation on wealth taxation in developing economies, including capital income taxation and the benefits of introducing such taxes.
The symposium aimed to shed light on key tax-related issues and provide participants with a better understanding of proposed tax reforms and their implications for the Sri Lankan economy.