Sunday Nov 24, 2024
Sunday Nov 24, 2024
Wednesday, 1 November 2023 00:38 - - {{hitsCtrl.values.hits}}
Cabinet Co-Spokesman and Minister Bandula Gunawardena
The Government yesterday announced it has decided to increase the Value Added Tax (VAT) rate from 15% to 18% effective from 1 January 2024 to meet the revenue targets stipulated by the International Monetary Fund (IMF).
“Despite a remarkable 51% increase in tax receipts in the first nine months, the Government’s revenue collection did not meet the IMF agreed revenue expectations,” Cabinet Co-Spokesman and Minister Bandula Gunawardana said at the post-Cabinet meeting media briefing yesterday.
He also said that the Government will introduce new taxes on specific goods and services which are currently not covered by the VAT from 1 January 2024.
Cabinet Co-Spokesman said the move is to meet the agreed tax revenue and primary balance targets as agreed with the IMF.
“During the first review of the program under the $ 2.9 billion Extended Fund Facility (EFF) one of the key factors highlighted by the IMF staff mission was the inability to collect the stipulated revenue targets. Thus, the second tranche was delayed,” he added.
Acknowledging that the Government is aware of the hardships the public deals with, he said there is no other choice, but to increase taxes.
Gunawardena said the Government revenue increased to Rs. 1.7 trillion (around $ 5.19 billion) in the first nine months compared to last year but this amount is barely sufficient to pay public sector salaries, meet welfare payments and other recurrent expenditures.
He also noted that additional taxes are likely to be introduced in the upcoming Budget, which will be presented to Parliament on 13 November.
The decision to raise VAT drew rebuke from the public, who are struggling to make ends meet as a result of lawmakers’ costly blunders.
