Ranatunga, who led Sri Lanka to victory in the 1996 World Cup, had been at the forefront of the project to first raise the money and then erect a 325-foot artificial tree in central Colombo.
However Ranatunga had to beat a retreat after the Archbishop of Colombo Malcolm Ranjith said the scheme was "wasteful expenditure" and the money would have been better spent on helping the poor.
The 53-year-old, who represents a largely Catholic parliamentary constituency, had recently laid the steel base of the tree which was beginning to take shape on Colombo's Galle Face beachfront promenade.
Ranatunga had said that it would be the tallest artificial Christmas tree ever built anywhere in the world.
According to Guinness World Records, the largest artificial Christmas tree was erected in the southern Chinese province of Guangzhou last year, measuring around 55 metres.
Last year Sri Lanka's Catholic church urged priests not to put up Christmas trees in their churches over the festive period, with Cardinal Ranjith saying they had no religious significance.
Sri Lanka is a mainly Buddhist country but around 1.2 million of its population of 21 million are Catholics.
December 25 is a national holiday and shops and streets are often lavishly decked out with Christmas decorations and lights.
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