Rajapaksa said that the VAT on goods and services will increase from 11% to 15% and cause hardship to the consumer.
“We can in no way agree to the increase in the VAT rate, its 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,” he said.
He noted that the increased VAT is to be imposed even on private medical care which had always been exempt from VAT.
“This imposition will cause an immediate 15% increase in private medical costs. For example, a by-pass heart operation 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 added.
He also said that the VAT is to be imposed on the small and medium wholesale and retail trade as well and this will cause a rapid escalation in prices throughout the country and in a short time bring about a reduction in consumer demand.
“The 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,” he said.
He says the tax hikes are being imposed to finance the various concessions that the Government gave out to win the elections. (Colombo Gazette)