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Massive tax hike as IMF prepare to meet

The Sri Lankan government has raised taxes on cigarettes, alcohol and automobiles in an attempt to meet conditions for an instalment from an IMF loan, according to an opposition MP.

The government announced on Saturday, that they hoped to raise as much as 3 billion rupees from taxes on alcohol and tobacco, as well as raising taxes on vehicles as much as by 100%. There was no change on the levies imposed on tractors, trucks and buses, which has been used as a loophole in the past to import luxury limousines.

The move was made ahead of an IMF board meeting on Monday, after they said they may consider release an $800 million entrenchment of a recently suspended $2.6 billion loan.

UNP MP Harsha De Silva commented,

The government is trying desperately to get that money that was suspended. In order to do so the government has to do a whole bunch of things including the increase in utility prices, the increase in interest rates and the depreciation of the currency. This increase in taxes looks very much in preparation for the IMF meeting scheduled on Monday.

“The common man is left in the lurch. Just like they increased the taxes on kerosene the government has yet again taken to task the average citizen.”

See our earlier posts:

Sri Lanka’s emerging economic crisis (18 Mar 2012)

Prices rise as Mahinda Economics unwinds (16 Feb 2012)

Mahinda Economics (21 Sep 2011)

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