The government's interim budget proposed a mansion tax of Rs. 1 million on houses that are worth over Rs. 100 million or having 5,000 square feet, whichever is higher on an annual basis.
Introducing the mansion tax during the budget speech, Minister Karunanayaka said that there is a need to introduce a mechanism to collect due revenue to the government arising from the high end luxury house owning segment in Sri Lanka.
The relevant tax, in addition to local authority rates and taxes, would be collected on an annual basis commencing 2015 through the local authorities.
The government is to now revise this proposed new tax. Finance Minister Karunanayaka said that there is confusion over this levy, which was mooted to get tax defaulters who were building palatial houses with the money they have earned to pay a tax for such earnings.
The Finance Ministry according to reports is to now increase the floor area of houses and place a construction date from which the levy would be applicable.