Chat Tax

Sept 25, 2007 (LBO) – Mobile users in Sri Lanka would pay a new 10 percent tax on call charges from today, a senior treasury official said Tuesday. The tax bill authorizing the increase was signed into law by the Speaker of Sri Lanka’s parliament, yesterday, he said.

The official said the government hopes to raise two billion rupees from the new charge. The tax was earlier set at 2.5 percent.

The government dropped a 50 rupee monthly tax which would have hit poor users the hardest at the last minute on the intervention of telecom minister Rauf Hakeem earlier this month.

Sri Lanka government has been looking to raise cash to bridge an expanding budget deficit that is crippling economic activity.

It is juggling with a bloated public sector that gets tax free salaries and pensions, duty slashed cars as well as an ever increasing subsidy bill that is kept in place to buy popularity.

In the first five months of the year, 57 cents out of every tax rupee collected went pay the salaries and pensions of state workers.

However analysts say the decision to increase taxes – even for unproductive expenditure – is a better move th