M K Shivajilingam, a northern provincial council member and a senior member of Tamil Eelam Liberation Organisation (TELO) said the party central committee had decided to vote against the budget on December 19.
TELO is a constituent member of TNA the broader alliance of northern Tamil parties. The TNA voted in favour of the budget's first reading on December 2.
"We want the release of all Tamil political prisoners to happen before the vote," Shivajilingam said.
The Tamil party's demand however has been for a release based on common amnesty. Tamil prisoners staged hunger strikes demanding the intervention of President Maithripala Sirisena.
The Sirisena government has also come under criticism from Sinhala nationalist groups over the release of LTTE suspects claiming it endangers national security.