PM announces more changes to Budget, increase in VAT

Prime Minister Ranil Wickremesinghe today  announced  more changes to the government s tax regime increasing the Value Added Tax (VAT)  and  removing tax relief given to several sectors.

In budget 2016 it has been proposed to implement two rates of Value Added Taxes as 8 percent and 12.5 percent instead of the 11 percent of single rate. However it seems that it is prudent that we maintain a single rate of 15 percent, the Prime Ministr said in a special statement to the House.

He said tha the government would remove the tax reliefs granted to telecommunication services, private education and private medical care. We would not let the low income groups to suffer the increase of VAT. We would not impose the VAT for essential commodities.

The Prime Minister said that with the election of Maithripala Sirisena to the Presidency we could turn back the direction the country was being dragged. We changed the policies that enabled the concentration of all resources around a single family. We provided relief to people under the 100-day government.

However,he said,  it is not an easy task to salvage the economy from where it was.

“The previous government had taken massive amounts of loans. That government did not follow formal procedures in taking loans. They had obtained loans at their will without worrying how to pay them back. We did not have proper or complete records of the amounts of loans taken at the time we prepared the budget 2016. Some information we received only after the budget. According to the latest documents, the country’s total outstanding as at the end of year 2015 were Rs8,475 billions, which amounts to 74.9 percent of the GDP. “

He said that due to the economic mismanagement of the Rajapaksa regime, the country is in a debt trap of Rs 9.5 trillion. “The challenge before us today is to get out of that trap. The current economic crisis is another challenge that we should face. World market oil prices are on the decline. Those who demand that the local oil prices be reduced do not see the danger behind it. On the other hand the Ceylon Petroleum Corporation has outstanding loans of Rs 365 billions. “

Chandani Kirinde