While the Select Committee on Economic Management has agreed to the re-introduction of the Capital Gains Tax (CGT), the Cabinet has granted approval for the drafting of such a new system.
The government states that there has been a huge growth in private capital in the country during the past several decades and while huge infrastructure developments like highways development projects have contributed towards this and hence land owners have been able to enjoy huge capital gains without paying any taxes especially due to the increase in the land values through such development projects.
Since this has increased the anomaly in the distribution of profits, this step has been taken to rectify the situation, said Cabinet spokesman Minister Gayantha Karunatilleke during the media briefing to announce Cabinet decisions.