Sri Lanka lost around 1 million taxpayers since 2019 tax cuts
The Finance Minister of Sri Lanka, Ali Sabry,
revealed that, in the past two years, the island nation lost around 1 million taxpayers. The country lost these taxpayers after the government of Gotabaya Rajapaksa announced major tax cuts in the year 2019 in order to boost the growth.
Currently, Sri Lanka is battling its worst economic crisis.
The reduction in tax was introduced in November 2019 as President Rajapaksa promised in his election campaigns earlier. Following this, the Cabinet of Sri Lanka reduced the value-added tax (VAT) to 8 percent from 15 percent and also removed seven other taxes.
As a result, these whopping tax deductions led to a credit rating downgrade in the following year, which eventually worsen the economic situation of the country.
On Thursday, the Finance Minister further told that Sri Lanka lost about 500,000 taxpayers each in 2020 and 2021 after the ill-timed tax cuts were delivered. He said, "From around 1,550,000 taxpayers at the beginning of 2020, the number came down to 1,036,000 in 2020 and to 412,000 in 2021. This is a massive problem for us.”