Sri Lanka taxable workers to shrink, creating multiple crises

Aug 25, 2008 (LBO) – Sri Lanka’s government will run out of working people to tax in the future, as retirees increase and the workforce shrinks, creating a crisis that will leave a rapidly ageing population unprotected, a top financial analyst has warned. To recieve instant alerts from LBO on your Dialog mobile type ‘act (space) lbo’ and send to 678

The government is currently getting benefits from a demographic bonus, as a large proportion of the population is part of the workforce.

Aging Base

At the moment 49.8 percent of the population is in the labour force. But this is likely to change in the future.

At the moment the government is able to charge more taxes from the working population.

“Currently there are six working people supporting one person in retirement,” Murtaza Jafferjee, chief executive of JB Securities, told a forum on retirement planning organized by the Colombo Stock Exchange.

“In a few years’ time three persons will have to support one person. So you are moving into an era where you will have rising healthcare costs because the population is ageing.

“There is a rising pension cost for the government because more people are retiring.”

The median age of Sri Lanka