Sri Lanka’s senior citizens having a tough time with escalating cost of living received another blow with a government’s decision to increase the withholding tax (WHT) and remove the exemption given to them on interest payable for their deposits in commercial banks. The 2017 budget proposal of WHT increase from 2.5 per cent to 5 [...]

The Sunday Times Sri Lanka

Another blow for senior citizens dependent on interest income

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Sri Lanka’s senior citizens having a tough time with escalating cost of living received another blow with a government’s decision to increase the withholding tax (WHT) and remove the exemption given to them on interest payable for their deposits in commercial banks.

The 2017 budget proposal of WHT increase from 2.5 per cent to 5 per cent and removing  the tax exemption given to senior citizens will hit savers, particularly older savers trying to live on savings income.

The WHT increase from 2.5 per cent to 5 per cent is expected to raise an additional Rs. 26 billion, budget documents showed.

But the government’s proposal to raise this money from all savers including some 750,000 senior citizens with savings and fixed deposit accounts in commercial banks to the total value of Rs. 750 billion is highly unreasonable, a group of older savers, told the Business Times.

This group comprising retired senior public and private sector officials and professionals including senior journalists has sent a letter to the President urging him to exempt senior citizens from WHT.

They noted that the good governance government which came to power giving promises to provide relief for senior citizens has removed the concession given to senior citizens in the 2015 budget of the Mahinda Rajapaksa regime.

In the 2015 budget presented by Rajapaksa on October 24, this is what the former president said on this proposal:

“I propose to exempt interest income of deposits held by elders and reduce the withholding tax on interest to 2.5 per cent from next year”.

According to the 2015 budget proposal, a single withholding tax rate of 2.5 per cent had been implemented irrespective of the amount of interest and a tax exemption was given to senior citizens.

The action to catch senior citizens in the withholding tax net shows the government’s inhuman and stubborn attitude of trying to ‘earn money killing even the dogs’, they said.

The Business Times also received dozens of calls from elderly citizens pleading for justice and fairplay in the enforcement of this WHT hike.

In their letter to the president, the elder savers group has urged the President to re-introduce the WHT exemption given to them from 2015 budget.

However a senior Finance Ministry official told the Business Times there is room to make any adjustments to the budget proposal as the necessary circular and guidelines will be issued by the Treasury only after the passing of the 2017 budget in Parliament.  The government has to allocate more funds to fulfill health care and welfare needs of elderly citizens, whilst the national expenditure priorities would be negatively impacted with the availability of the limited fund for the public investment activities and for economic prosperity,
he added.

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