Rajapaksa accused the Government of engaging in another cynical trick and deception and urged the public to rise up as one against the impending tax increases.
“No state can exist without taxes. A Government needs revenue to carry out its functions and taxes are charged not only on the incomes of the rich but on goods and services used by the general population as well. Even essential items such as fuel, telecommunications, electricity and food are often targeted for taxation because such goods and services will be bought regardless of the price and therefore guarantees revenue. However, taxes have to be justifiable and reasonable. It is in that light that we should examine the tax increases that are to come into effect from 2 May 2016,” he said in a statement.
He said that the international prices of virtually everything Sri Lanka imports declined after the current Government came into power in January last year.
“During my tenure in office from 2006 to 2014, the international prices of all these commodities were much higher. Between 2011 and 2013 crude oil was consistently above 105 USD per barrel and went below 100 USD only after September 2014. The price of urea fertiliser reached 750 USD per tonne in 2008 and remained above 500 USD throughout 2011-2013. Steel reached a high of 1,265 USD in 2008 and until 2013, was always over 500 USD per tonne. Wheat went up to 440 USD per tonne in 2008 and sugar reached a high of 655 USD per MT in 2011 and the prices of both commodities remained high throughout my tenure in office,” he said.
He said that given the declines in the international prices of all commodities that took place last year, prices in Sri Lanka should have gone down significantly.
“While benefitting thus from lower global commodity prices, the government is now trying to increase the VAT rate from 11% to 15% and widen its applicability to hitherto exempt sectors like telecommunications, health and education. This will cause a 4% increase in the prices of goods on which VAT is already being charged and a sudden 15% increase in the costs of telephone and internet services, medical specialist channeling services, medical tests, private hospital care, private education from nursery school to tertiary level as well as private tuition classes. The applicability of the 2% Nation Building Tax has been extended to telecommunications and electricity as well. Telephone and internet services will see the highest price increases as it will be hit by the VAT as well as the NBT. The NBT on electricity will bring in huge revenues because it will be charged from all users of electricity,” he added.
Rajapaksa says the Government made irresponsible promises at the presidential election in order to win votes and after winning, they had to fulfill at least some of their election pledges if they were to win the parliamentary election. (Colombo Gazette)