Mahinda asks all MPs to oppose VAT bill on Aug 11
Posted on August 4th, 2016

Courtesy Adaderana

August 4, 2016  04:04 pm

 Former President Mahinda Rajapaksa says that what makes the VAT increase most objectionable is that it is being imposed on the public to finance the salary increase and various other concessions that the government gave against all economic reasoning in order to win the general election.

No previous government has taken such liberties with public finances for political purposes,” he said, in a statement issued today (4).

He called on all members of parliament to oppose the Value Added Tax (Amendment) Bill when it comes before parliament on 11 August.

I believe the president will also make an intervention in this matter as he has stated publicly that he will not allow unreasonable taxes to be imposed on the people.”

The VAT on ill-health and the VAT on the small and medium retail and wholesale trade should not under any circumstances be allowed to be passed into law,” he said.
Full Text of the Statement

The Bill to increase and broaden the application of the Value Added Tax will be taken up in parliament on 11 August. This draft legislation seeks to revive and give legal effect to all the objectionable features of the VAT reforms that were suspended by the Supreme Court last month. The new VAT Bill seeks to increase the VAT rate from 11% to 15%, to bring the small and medium retail and wholesale trade and the private health care services within the ambit of VAT and to mandatorily require all establishments with a turnover exceeding Rs. 33,000 a day to register for VAT. A tax on health care is in effect a tax on ill health. The more serious the illness, the more revenue the government will make from that patient. Everyone knows that those who make use of private health services are not only the rich.

Traders and small businessmen countrywide, opposed the 15% VAT imposed on the wholesale and retail trade because it will cause an increase in the prices of goods when it is passed onto the consumer and lead to reduced sales. Previously the VAT on the retail and wholesale trade was limited to large establishments with a turnover of more than Rs. one million a day. But when the threshold is brought down to Rs. 33,000 a day, that brings even small establishments within the ambit of VAT. When retail sales drop as a result of increased prices, that leads to a chain reaction whereby the manufacturers who supply the goods don’t get enough orders to be able to break even.

The small and medium sector has already suffered a reduction in turnover due to the general economic slowdown after the yahapalana government came into power. It was reported in the press that even the profitability of many large listed companies had declined in 2015. The fear is that the reduction in sales which will result from the VAT increase will destroy the small and medium sector. We have heard that due to the widespread opposition to VAT, the government is contemplating reducing the VAT rate and increasing the Nation Building Tax (NBT) rate. The public should be aware that VAT and NBT are both taxes imposed on turnover and the threshold for registering for both taxes is Rs. 33,000 and they are applicable to virtually the same goods and services so no difference will be made as far as the public is concerned by reducing the VAT rate and increasing the NBT rate.

Such attempts at deception must be resisted. The imposition of VAT/NBT on small business like eateries, barber shops, retail shops, repair shops, service stations, furniture shops etc as well as cottage industries will be a severe burden on that sector as they operate mostly on credit. Operations of small and medium business places in economic hubs like Dambulla, Embilipitiya, Pamunuwa, Pettah – just to mention a few – will be endangered. The government should be mindful of the fact that the small and medium sector is the largest employer in the country – not the government or the formal private sector.

What makes this increase in VAT most objectionable is that it is being imposed on the public to finance the salary increase and various other concessions that the yahapalana government gave against all economic reasoning in order to win the August 2015 parliamentary election. No previous government has taken such liberties with public finances for political purposes. I call upon all members of parliament to oppose the Value Added Tax (Amendment) Bill when it comes before parliament on 11 August. I believe the president will also make an intervention in this matter as he has stated publicly that he will not allow unreasonable taxes to be imposed on the people. The VAT on ill-health and the VAT on the small and medium retail and wholesale trade should not under any circumstances be allowed to be passed into law.

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5 Responses to “Mahinda asks all MPs to oppose VAT bill on Aug 11”

  1. Noor Nizam Says:

    Humble request to all Muslim Parliamentarians and Ministers to oppose the VAT bill on August 11th., in the parliament. While the general public is severely burdened by this VAT taxation and the price increase of consumer goods, the Muslims who are traditionally traders and small boutique owners/businessmen have been affected to the extreme. Therefore the Muslim Parliamentarians and Ministers should vote against this VAT bill.

    Noor Nizam. Peace and Political Activist, Political Communication Researcher, SLFP Stalwart and Convener – The Muslim Voice.

  2. sena Says:

    Politicians think of themselves not the country. This issue as well as relations with China should not have been taken as an election propaganda as it is related to foreign relations

  3. jay-ran Says:

    “I believe the president will also make an intervention in this matter as he has stated publicly that he will not allow unreasonable taxes to be imposed on the people.”
    Dear Sir Hon MR,Polonnaruwa hora Sira utters such things but NO ACTION!!
    Although Traitor Sira is the President the Country is RULED BY THE BATALANDA MURDER CHAMBERS KILLER RANIL and he will never listen to Sira.
    Can you remember Sir,SIRA BEGGED RANIL NOT TO APPOINT BOND SCAM HORA ARJUNA MAHENDRAN AS CENTRAL BANK BOSS,RANIL DID NOT CARE FOR THE REQUEST & APPOINTED BOND SCAM HORA ARJUN,MAKING PONNA SIRA A P{UPPET PRESIDENT!!!

  4. Fran Diaz Says:

    Pres MR has also stated in another report that Yahap govt folk have borrowed more money in their one & half yrs in power, than the MR govt did in nearly 10 yrs. Pres MR also stated that every govt has to face borrowings from the previous govts – that is nothing new !
    I am adding that the fact that the MR govt had to face borrowings done when CBK was President, and also debts from the Premadasa & JRJ govts. – all moneys yet unpaid accrued to the MR govt.

    In the same way, MR govt borrowings yet unpaid had to be taken on by the Yahap govt.

    All previous govts including the MR govt did good Development work for the country with the money borrowed. Besides all that, the MR govt had to fight the final war with the LTTE too, and do heavy duty re-construction work in the N&E due to destruction of nearly 30 yrs of war with the LTTE.
    Unfortunately, not even a corner stone has yet been laid for any construction work by the Yahap govt. !! They have nothing yet to show for all the borrowing done. However, a lot of pocket stuffing of party folk has gone on. Shame on them !

    Now Yahap, after doing some heavy borrowings and two scams in the Central Bank, paying very high salaries & luxury perks to MPs, is trying to say that the govt monetary problems are due to the borrowing by the MR govt. !! What perfidy !

    We might also ask who scammed the

  5. Fran Diaz Says:

    pls ignore last incomplete line.

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