brand logo

Petitioners allege proposed Inland Revenue Bill amendments ‘arbitrary’

06 Nov 2022

  • Claim proposed tax amendments unconstitutional
  • Should require approval via two-thirds in Parliament and referendum
Petitioners of the Supreme Court Special Determination on the Inland Revenue (Amendment) Bill allege that the proposed amendment is arbitrary and irrational since it will favour high income earners as the percentage increase in personal income tax envisaged under the amendment is disproportionately higher for lower income earners. Bar Association of Sri Lanka President Saliya Pieris, PC appearing for one of the Petitioners, made submissions before the Supreme Court setting out that the amendment of the tax slabs and the reduction of the tax exemptions from Rs. 3 million to Rs. 1.2 million had resulted in a situation where the percentage increase of income taxes in comparison to the monthly wage was lower for high income earners compared with lower income earners.  This matter was taken up before a three-judge bench of the Supreme Court comprising Justices B.P. Aluwihare, PC, Murdu N.B. Fernando, PC, and Janak de Silva on 31 October 2022.  Eight Petitioners had filed petitions before the Supreme Court alleging that the provisions of the proposed tax amendment were unconstitutional and therefore required the approval of a two-thirds majority in the Parliament and approval of the people at a referendum. The main argument of the Petitioners was that the reduction of the income tax threshold to bring all persons earning over Rs. 100,000 per month within the income tax net was irrational because it was imposing an additional tax burden on low-income persons who were already struggling to survive in the current economic conditions.  It was also highlighted that the revocation of the tax exceptions granted to CSE listed companies and the removal of the incentivised 14% tax rate for certain specified industries was a violation of the legitimate expectation of taxpayers. The Petitioners alleged that due to the irrationality of the amendments proposed, they were in violation of Article 12 of the Constitution. In addition to the eight Petitioners, there were two intervening petitioners representing the UNP and another public interested person, who made submissions in favour of the tax amendments.    – By Shenal Fernando


More News..