By: Staff Writer
Colombo (LNW): The Government is ready to reconsider the the inclusion of 97 out of the 138 items slated for the application of Value-Added Tax (VAT) starting January 1, 2024, State Finance Minister Ranjith Siyambalapitiya said.
Siyambalapitiya made this statement recently on the eve of the presentation of the VAT amendment bill in parliament on December 10 aimed at increasing the rate to 18 percent from the present 15 percent marking the highest level in two decades.
The current economic landscape, characterized by escalating income taxes, elevated electricity tariffs, and rise in fuel prices, suggests that an additional VAT increment will further strain consumers’ purchasing power, Ceylon Chamber of Commerce highlighted.
As consumer spending plays a pivotal role in our GDP growth, there’s a significant risk that this tax increase could lead to a further decline in consumption.
.It is likely to hit the spending on consumption of the people, wage earners in particular who have already taken loans, leases and housing loans from bank and finance companies.
The Government is to raise more that Rs.600 billion equivalent to 2.1 of GDP from the 18 percent VAT hike catching petrol diesel and fertiliser which were not liable for this tax earlier in to this tax net, they revealed.
Accordingly an additional sum of over Rs 30,000 will have to be spent by a person per year due to this indirect tax revision, chairman of the parliamentary ways and means committee Patalee Champika Ranawake disclosed.
Several officials of the Ministry of Finance stated that agricultural machinery and other equipment including chemical fertiliser which was listed as exempted previously will be VAT liable under the Vat amendment bill.
They added that that agricultural seeds, agricultural plants, shrimp feed inclusive of prawn feed and animal feed excluding poultry feed will however be exempted from VAT.
Furthermore, dairy products such as liquid milk and eggs will also be liable for the VAT. However, the Ministry of Finance stated that wheat, wheat flour or powdered milk, pharmaceutical products, drugs will be exempted.
Minster Siyambla pitita said the government is prepared to take into consideration the concerns raised by various parties with regard to the proposed removal of VAT exemptions.
He claimed that the government expects to generate an income of Rs.378 billion through the revision of the list of goods exempt from VAT.
The agricultural seeds, agricultural plants, shrimp feed inclusive of prawn feed and animal feed excluding poultry feed will however be exempted from VAT.
Furthermore, dairy products such as liquid milk and eggs will also be liable for the VAT. However, the Ministry of Finance stated that wheat, wheat flour or powdered milk, pharmaceutical products, drugs will be exempted.
