The joint Maithri – Ranil administration too cannot salvage the economy of the country, the tax policy of the government is very unreasonable and his party is against VAT states Information Secretary of the JVP Vijitha Herath.
Speaking at a press conference held at the head office of the JVP at Pelawatta today (16th) Mr. Herath said, “The new government proved throughout last year that it, just like the previous government, cannot salvage the economy of our country. As it doesn’t have a programme to come out of the economic crisis people are burdened with excessive taxes just like the previous government. It begs for loans and relief given to the masses is slashed. This government too is left with only taking loans, slashing relief and burdening people with taxes.
The present government took loans from the IMF by promising that people would be taxed to increase the state revenue through taxation. It is due to this promise that a tax bill is presented by the government creating a state of chaos in the country. There is a principle that is adopted to implement the tax policy. According to it the taxation in a country should be definite. It should be simple and convenient for the masses. Also, it should be fair. Initially this government stated that direct taxes would be increased so that indirect taxes for the masses would be brought down. Ranil Wickremesinghe said this clearly in Parliament. Indirect taxes are levied from the masses while direct taxes are levied from those who earn very high incomes. The government that stated direct taxes would be increased has gone back on their words the rate of direct taxes brought down increasing the rate of indirect taxes. The direct taxes have been brought down from 35% to 17%. However, the taxes levied for ordinary folk have been increased. It is the ordinary folk who are tormented by the increase of VAT and Nation building tax.
The government could not implement VAT properly. When the budget was presented last December VAT was included. Later, the Prime Minister, making a special statement, increased VAT from 11% to 15%. When VAT of certain goods increased by 4% certain other areas which were not levied any taxes were brought under VAT with a rate of 15%. The letter sent to the Commissioner of Inland Revenue by the Ministry of Finance indicates this clearly. The Nation Building Tax of 2% was levied for electric bills and telephone services. As a result not only VAT increased by 4% but also certain items and services that were not taxed earlier were taxed anew. The Parliamentary approval was not sought for the VAT Bill earlier. As such, Supreme Court stating that the due constitutional procedure and the parliamentary Standing Orders had not been followed when presenting the Value Added Tax (Amendment) Bill nullified it. However, already the people were paying VAT. The Bill was properly presented to parliament only at the third time.
There were no big changes in the amended bill. Small shop owners closed their shops, agitated against the Bill to pressurize the government. This brought about a conflict within the government. The government has amended only the annual income of Rs.50 million needed for registration. Accordingly, only those who earn above Rs. 103800000 could register for VAT. There are other taxes that have been added. VAT has been introduced for air tickets. Milk products that include sugar have been taxed. There are many areas in health sector that have been taxed. Only a few amendments have been made due to protests by the people.
Parliamentarians of the SLFP said there were many defects in the Bill and they would bring in many amendments. What are the ne proposals put forward by the SLFP? They brought in only the proposal to increase turn-over of Rs.30 million to Rs.50 million. The taxes for mobile phones and fixed telephones remain the same. When VAT, NBT, Telecommunication levies are added a re-load of Rs.100 would be taxed 49.73%, About 2 million Sri Lankan foreign employees have to pay ‘International Telecommunication Operators Levy (ITOL)’. Mobile phones are no longer luxury items. They are a service directly utilized for production and trade. Hence levying a tax for such services is not justifiable. The vegetable farmer harvests, transports and finds out prices through mobile phones. Hence, telephone services are directly linked to production. When it is so, Minister Rajitha Senaratna says to off mobile phones if they the services are too expensive.
According to statistics the government earns 25% of its revenue from VAT. Government’s income of Rs.647,500 million included Rs.171,510 million received as VAT which was 26.48% of the income. In 2013 this rate was 24.05% and in it was 24.8%. It is the ordinary people who have to pay the large portion of this tax. This is contrary to the tax policy of a country.
The manner the VAT Bill was presented was wrong. However, people have paid the VAT. According to this tax the charges for channel services have increased by 25%. Despite levying this tax was later abandoned as it was not legal, there is no process for the people who had already paid these taxes for health services, goods and services to get back what they had paid as taxes. The people have a right to get back this money. The government must prepare a structure for it. The JVP, even then, stated that the process of increasing taxes was unfair and we opposed it. Hence, even with amendments we would vote against it. SLFP ministers despite expressing their opposition outside the parliament, they voted for it in the cabinet. They opposed outside Parliament to deceive masses. The VAT is presented jointly by the UNP and the SLFP. We ask the SLFP to vote against the Bill if they are really against it. The VAT Bill would be adopted expecting IMF loan before the budget is presented. As such, it is very evident that this ‘joint’ government has no answer for the economic crisis in our country. Both the UNP that commemorated its 70th anniversary and the SLFP that celebrated its 65th anniversary stated government formed in 2020 would be from either of their parties. However, they say they are jointly developing the country now. If they could develop the country jointly, why would they want to form a government by one of their parties? These are gimmicks to deceive their party men. Hence, we ask the people in this country to oppose the unfair tax policy of the government and its anti-peoples policies. Also, we invite the masses to come forward to build a just administration with a production economy.