Sri Lanka is to reintroduce a 100 percent tax on foreign nationals buying property and restrict the sale of land to foreign companies, Finance Minister Sarath Amunugama said on Thursday.
The previous government lifted the tax in 2002, arguing that foreigners buying land - mostly along the beaches of the south-west coast - stimulated the local economy, but Amunugama said it was having a negative impact on those areas.
"A large number of families don't have land. In a situation where locals don't have land, why should we give it large-scale to foreigners?" he asked.
"We don't want the local entrepreneurs to be edged out of their own country," Amunugama said.
He said he did not think the tax would have any impact on foreign investors, who are already closely watching the policies of the new government, which includes a powerful Marxist coalition partner.
The government has said that foreigners buying land for holiday homes have priced locals out of the market and deprived them of property that could be used for farming.
Amunugama said the tax - which still must be passed by parliament - would not be retroactive, but that the government would appoint a committee to look into irregularities it says may have been carried out during the past two years.