Government pledges 75% dip in cost of living by end-1Q24

• Says existing tax policy assures continued relief for citizens in future
• Asserts citizens bear responsibility of supporting government investments
• Points out negative publicity on tax amendments has led to unwarranted price hikes 

Sri Lanka entered the year 2024 with a tax shock, which has resulted in price escalations across almost all goods and services. However, the government continues downplaying the implication, stating there will be no major hit in the cost of living.
Trade, Commerce and Food Security Minister Nalin Fernando yesterday pledged that a staggering 75 percent reduction in the cost of living would be witnessed by the end of 1Q24.
According to Fernando, what will usher in this massive relief are reforms, particularly in the area of tax.

“The existing tax policy assures continued relief for citizens in the future. While some argue against levying taxes for government income, it must be emphasised that such statements are counterproductive to the country’s economic growth. 
Citizens bear the responsibility of supporting the government investments in the country’s future using the tax revenue,” said Fernando addressing a press conference at the Presidential Media Centre.  

He pointed out that taxation in Sri Lanka stands at a modest 12 percent, significantly lower than the 38 percent to 43 percent in countries attracting emigrants. 
“These nations have thrived due to their tax policies,” said Fernando, who stated that negative publicity surrounding tax amendments, including the Value Added Tax, has led to unwarranted price hikes by intermediaries and some companies, placing pressure on the people.
Sri Lanka’s GDP rose 1.6 percent year-on-year in the third quarter of 2023, rebounding from a 3.1 percent contraction in the previous quarter, as the country begins to recover from its worst financial crisis in seven decades. 
It was the first economic expansion since the last quarter of 2021, helped by the moderation in inflation, a strengthening currency and lower interest rates.