MR on VAT: Milking the sick
Posted on September 21st, 2016

 Courtesy The Daily Mirror

Former President Mahinda Rajapaksa, who expressed his opposition to the Valued Added Tax (Amendment) Bill, urged the Government to reconsider its proposals at least at this stage.

Issuing a statement, he said the VAT on goods and services would increase from 11% to 15% and cause hardship to consumers if the Bill were to be enacted.

This increased VAT is to be imposed even on private medical care, which had always been exempt from VAT,” he said.

This imposition will cause an immediate 15% increase in private medical costs. For example, a by-pass surgery that presently costs about Rs.700,000 would in future cost Rs.805,000. Many ordinary people make use of private medical services today. This tax attempts to raise revenue through sickness and suffering. The more serious the illness, the more money the Government would be squeezing from the hapless patient,” he said.

The increased VAT is to be imposed on the small and medium wholesale and retail trade as well. My Government charged VAT only on wholesale and retail establishments with a turnover of around

Rs. 2,800,000 per day, which ensured that the tax applied only to the largest up-market retail businesses enjoying economies of scale. However, by slashing the threshold to just Rs. 138,000 a day, the Yahapalanaya Government has brought all wholesale establishments, and a good number of retail establishments within the ambit of VAT.

This will cause a rapid escalation in prices throughout the country and in a short time, bring about a reduction in consumer demand. Previous Governments never imposed VAT on the small and medium wholesale and retail trade because of the negative impact it will inevitably have on the economy.

Commodity prices have been declining all over the world but in Sri Lanka the prices of goods and services will be going up because of these tax hikes imposed to finance the various concessions that the Yahapalanaya Government gave out to win elections.

Thus the people themselves are being forced to bear the cost of the deception that was practiced on them. We can in no way agree to the increase in the VAT rate, it is unconscionable imposition on the sick and the elderly, and its imposition on the small and medium wholesale and retail trade without any concern for the all round price increases that it will cause. There is still time for the government to amend these oppressive VAT proposals,” he said.

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2 Responses to “MR on VAT: Milking the sick”

  1. aloy Says:

    MR & Co. milked the country for five years after war.
    RW increase the government spending by giving Rs. 10,000 a month to unproductive public servants.

    And now the GOSL has to find money; they will surely increase VAT.

    My gut feeling is that all our exports will become expensive and lose markets. Alternative would be export more housemaids to ME. Soon there will be more demand for them as ASEAN countries no longer sending their’s.

  2. Dilrook Says:

    What Mahinda says is true. People will find VAT increase unbearable. Economic activity will shrink as people cannot afford goods and services. This will affect companies. Sri Lanka will soon have a recession like in 2001. Peaceful means of changing the government must exist in that case. The parliament cannot be immune from dissolution just because 19A tries to do it like in a dictatorship. People must be free to elect and dissolve parliament any time.

    However, during his second term (2010 to 2014) Sinhalas were milked to appease Tamils in the north and east. Over 90% of borrowed funds were wasted in the north east (without resettling displaced Muslims and Sinhalese) but over 90% of tax was collected from areas outside the north and east to repay those loans.

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