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Sri Lanka slashes taxes to boost sluggish economy
[COLOMBO] Sri Lanka slashed taxes by nearly half on Wednesday in a bid to boost an economy still struggling after deadly Easter Sunday suicide bombings that crippled the country's booming tourism sector.
Economic growth slowed to 1.6 per cent in the second quarter of this year after the devastating attacks, which killed 269 people.
New president Gotabaya Rajapaksa pledged to lift growth through tax changes ahead of his landslide election earlier this month.
A 15 per cent value-added tax was cut to eight per cent with immediate effect, while another two per cent goods and services tax will be abolished outright, Cabinet spokesman Bandula Gunawardena said.
The construction industry - which has slumped hard this year - will also see its corporate tax burden cut from 28 to 14 per cent.
Mr Gunawardena claimed that the measures would not hit the national budget.
"We expect revenue volumes to go up when the tax burden is smaller. There will be better compliance."
The government said the moves were forecast to lift economic activity by parliamentary elections next April.