Govt. mulls lower PAYE threshold in April if revenue soars

• Cabinet Co-Spokesman Bandula Gunawardena says President directed Treasury Secretary to explore possibilities of extending relief for public sector workers 
• Notes PAYE tax hike only applies to 10% of State-sector workers
• Asserts discussions to extend tax relief are ongoing

 By Charumini de Silva

Amid strong growing protests against heavy taxation, the Government yesterday hinted that the pay-as-you-earn (PAYE) tax threshold might be revised by April.

“There is a possibility that the threshold might come down by April, if the Government revenue expands as a result of tax reforms introduced,” Cabinet Co-Spokesman and Minister Bandula Gunawardena said in response to queries at the post-Cabinet-meeting media briefing yesterday.

The tax hike has resulted in a series of protests mainly led by State-sector trade unions whose members are paid lucrative salaries.

PAYE is a direct tax paid by individuals. The latest tax revision has made every person earning over Rs. 100,000 liable for PAYE tax.

However, Gunawardena said the PAYE tax hike only applies to 10% of the total State-sector workers but acknowledged that their allowances were also partly slashed due to tax reforms introduced amidst the ongoing economic crisis.

Earlier, the non-cash benefits were added to PAYE, but the new move has resulted in the majority of the public sector employees getting into tax nets for the first time.

The Cabinet Co-Spokesman also noted that President Ranil Wickremesinghe in his capacity as the Finance, Economic Stabilisation and National Policies Minister has already directed the Treasury Secretary to explore the possibilities of extending some relief for the State-sector workers.

“If there is a possibility to extend some tax relief, the State-sector employees will be considered as the first choice. Already several rounds of discussions have been conducted by the Treasury Secretary and senior officials of the Finance Ministry. The discussions are still ongoing and if the Government revenue boosts by April, it will be extended to the public sector workers,” Gunawardena added.