The Hon. Kabir Hashim

¶ 01 Mr. Deputy Speaker, hearing the Hon. Deputy Minister try to justify the new taxes, I felt sorry for him. Regardless of the rhetoric, the costs ultimately come from the people’s pockets.

¶ 02 On the Strategic Development Projects Act (SDPA): it was introduced in 2008 under Mahinda Rajapaksa and was criticized by the JVP then as opaque, corruption-prone, unfair to domestic industry, and overly generous to foreign investors. Ironically, in 2025 the JVP Government passed the SDPA (Amendment) Act No. 26 to create a rules-based framework and curb discretionary, political decisions.

¶ 03 However, the Committee on Public Finance (COPF), chaired by Hon. Harsha de Silva, has raised objections to the regulation brought today under the amended SDPA, stating it is inconsistent with the 2025 reform’s objectives. For example, Category “A” grants 6–10 year tax holidays for foreign investors in tourism, while giving only five years to manufacturing and ICT. If we talk about building a production economy, on what basis do we privilege tourism over manufacturing?

¶ 04 Transparency is lacking: even after the 2025 amendment, “Strategic Development Project” is not clearly defined, allowing latitude to label projects as SDPs and grant tax holidays—creating a tool for abuse and favoritism. Where is the “system change”?

¶ 05 On tourism, the Government boasts about growth. In 2024, arrivals were 2.0 million; in 2025, 2.3 million—an increase of 0.3 million. But earnings rose only from USD 3.1 billion (2024) to USD 3.2 billion (2025)—a mere USD 100 million. Per tourist per day spending fell from USD 178 (2024) to USD 140 (2025). Moreover, USD 1.3 billion leaked back out in 2025. So, despite higher arrivals, net gains are weak.

¶ 06 Meanwhile, domestic businesses face cascading levies. The SSCL is a cascading tax that burdens consumers. You’ve lowered the VAT registration threshold from Rs. 60 million to Rs. 36 million, pushing small retailers—village groceries, vegetable, meat and fish vendors—into VAT, ultimately burdening consumers. This is the time to support domestic producers facing high fuel, electricity, transport and interest costs, not to raise taxes on them.