President Anura Kumara Dissanayake says the proposed tax on residential properties has been postponed, arguing that homeowners should not be taxed again on savings already subject to income tax.

President Anura Kumara Dissanayake has announced that Sri Lanka’s 2027 Budget will not introduce the proposed property tax, extending the Government’s decision to keep the measure out of its fiscal plans.

Speaking at a public rally in Gampaha on Sunday, the President explained that many houses had been built using savings accumulated from earnings on which taxes had already been paid. He argued that imposing an additional tax on such properties would place another burden on homeowners.

Dissanayake also recalled concerns raised during the election period that a National People’s Power (NPP) administration would seize people’s second homes. He said the Government had continued to exclude the proposed property tax despite preparing its third Budget.

The President noted that the issue had been part of discussions under Sri Lanka’s programme with the International Monetary Fund (IMF). However, he maintained that the Government’s position was based on the principle that property acquired through previously taxed income should not face an additional tax on that basis.

Under the IMF’s second review of Sri Lanka’s Extended Fund Facility, published in June 2024, a tax on the estimated rental income of owner-occupied and vacant residential properties was proposed as an alternative to a nationwide property tax.

Unlike a conventional rental-income tax, this measure would apply to the rental value a homeowner could potentially receive from a property, even if the property was not actually rented out.

The measure was initially expected to be implemented before the beginning of the 2025 tax year in April. In December 2024, Dissanayake told Parliament that discussions with the IMF were under way regarding programme commitments inherited from the previous administration, including the proposed tax.

The property tax has subsequently been excluded from the Government’s Budgets. The President’s latest remarks indicate that the measure will remain absent from the 2027 Budget as well.