Income tax protests: unions threaten to shut country down

ECONOMYNEXT –A collective of trade unions and professional associations representing high-income earning public servants has threatened to launch a nationwide general strike on March 01 if the government doesn’t address their concerns about a personal income tax hike.

Media spokesman of the Federation of University Teachers Association (FUTA) Charudaththa Illangasinghe told reporters on Friday January 17 that unions and associations representing education, power and energy and other utilities, ports, health and banking sectors plan to engage in large scale trade union action starting next week against the government’s recently introduced tax policy.

“We all decided unanimously today to agitate against this act and to reject it.

“We demand that the government immediately resolve this issue, or else by next week we will go into massive trade union action. The country may be shut down,” said Illangasinghe.

President of the Petroleum Public Employees Union Ashoka Ranwala said the unions have reached a “historic decision”.

“We have announced a black week from February 22. On March 01 we will reconvene and review the situation and on that day we plan to launch a nationwide general strike,” he said.

Trade unions and professional associations in Sri Lanka representing high income earners in the public and private sectors have been protesting a recent hike in personal income taxes that sees the cash-strapped government collect from anyone earning over 100,000 rupees a month.

Sri Lanka’s new tax regime has both its defenders and detractors. Critics who are opposed to progressive taxation said it serves as a disincentive to industry and capital which can be invested in business. They argue that a flat rate of taxation is implemented where everyone is taxed at the same rate.

Others, however, contend that the new taxes only affect some 10-12 percent of the population and, given the country’s economic situation, is necessary, if not vital.Critics of the protesting workers argue that most of the workers earn high salaries that most ordinary people can only dream of, and though there may be some cases where breadwinners could be taxed more equitably, overall, Sri Lanka’s tax rates remain low and are not unfair.