May 04, Colombo (LNW): Opposition Leader Sajith Premadasa has voiced strong objections to the government’s planned overhaul of Value Added Tax (VAT), cautioning that the proposed measures could place significant pressure on businesses and the wider economy.
In a statement shared on social media, Premadasa highlighted that from July 01, the authorities intend to expand the VAT base, increase tax rates, and enforce stricter compliance requirements all at once. He argued that such sweeping changes risk overwhelming businesses already grappling with challenging economic conditions.
According to his remarks, the revised framework is expected to bring small and medium-sized enterprises more firmly into the tax net, impose heavier burdens on financial services, and extend taxation to segments of the growing digital economy. He also pointed out that businesses would face more demanding reporting and compliance obligations under the new system.
Premadasa criticised the approach as being overly aggressive, describing it as a form of revenue extraction rather than meaningful fiscal reform. He stressed that economic growth cannot be achieved solely through increased taxation, warning that excessive pressure on enterprises could stifle productivity and investment.
He further noted that businesses require stability and operational space to remain viable, cautioning that if firms begin to struggle or shut down, the government may ultimately find its tax base eroding rather than expanding.