Dr. Harsha de Silva has expressed significant concerns regarding the proposed imputed rent tax under Sri Lanka's agreement with the International Monetary Fund (IMF), a statement said.
He emphasized that this tax, categorized as an income tax rather than a property tax, could disproportionately impact a wide range of income earners.
In a detailed analysis, he pointed out that an individual with a monthly salary of LKR 150,000 currently pays LKR 3,500 in taxes. However, if the same individual is subject to an imputed rental income of LKR 100,000 per month, their tax liability would skyrocket to LKR 21,000 per month, unless there are adjustments to tax thresholds and rates.
The proposal aims to collect LKR 150 billion by 2026, necessitating a broad tax net, but its fairness and practicality are under scrutiny.
Dr. de Silva challenged the Ministry of Finance’s claim that only the very wealthy will be affected by the new tax. He questioned how the Treasury plans to raise LKR 150 billion—equivalent to 0.8% of GDP—by 2026 through the taxation of imputed rental income, implying a wider impact than stated.
In light of these issues, Dr. de Silva commended President Ranil Wickremesinghe’s promise to amend the IMF agreement, taking into account strong objections from the Samagi Jana Balawegaya (SJB) party and other concerned groups.
He specifically called for the exclusion of "owner-occupied houses" from the proposed imputed rent tax to protect ordinary homeowners from excessive financial burdens.