How to offset budget without VAT, other taxes? | Daily News


Finance Minister asks Gota:

How to offset budget without VAT, other taxes?

‘Mahinda raised VAT to 20%’:

Finance Minister Mangala Samaraweera has challenged the SLPP presidential candidate Gotabhaya Rajapaksa to explain how he intends to bridge the Rs. 350 billion that would be lost per year by his proposed reduction of the VAT and exemption of other taxes as promised by him during his political campaigning.

He challenged the SLPP Presidential candidate to debate with New Democratic Front candidate Sajith Premadasa on their economic policies for the country.

Mangala Samaraweera told a press conference at the Finance Ministry yesterday that Sajith Premadasa’s election manifesto would be presented to the public on November 1.

“In 2006, the Rajapaksa regime not only increased the VAT up to 20%, they even imposed this tax on essential commodities such as dhal, sprats, mung beans etc. Thereafter, in November 2014 they reduced it to 11% as an election gimmick. Then in 2016 we brought it to 15%, but we exempted the essential commodities from this tax such as onions, potatoes, dhal sprats etc,” he added.

Samaraweera expressing his views on the promise made by Gotabhaya Rajapaksa to remove the PAYE tax said during the Rajapaksa regime all those who earned over 62,500 were taxed. “But we extended that to 100,000 exempting over 500,000 persons from having to pay such taxes.”

“The SLPP presidential candidate promised sweeping tax cuts under his government. Gotabaya Rajapaksa says that under his rule, the existing VAT will be reduced to 8 per cent, and taxes imposed on salaries of labourers and middle-class workers will be removed. Also, steps will be taken to relax taxes on agricultural produce, while removing other taxes such as the telephone tax, he had said.

“It is a dangerous thing that he is making such delusional statements as he is afraid of losing. I am not sure if he is making such statements due to his ignorance, foolishness or his fast declining political campaign. However, we are concerned that they are deliberately trying to hoodwink the people of this country. The message that the Rajapaksa political campaign is giving out is that they are prepared to bring the whole country down to ensure their victory. This is not a joke and if they implement such policies without proper foresight, this country would be dragged to become another Venezuela or Greece.”

He said unlike Gotabhaya Rajapaksa who evades media questions and looks to his brother Mahinda Rajapaksa for responses, Sajith Premadasa is well versed with his economic plans and is willing to face the media in an open debate with his opponent regarding their economic policies.

“If the VAT is reduced to 8% the income will reduce by Rs. 415 billion per year. This is the money we have utilised to conduct colossal development in the country despite the massive debt burden we were saddled with. Therefore, I ask Gotabhaya Rajapaksa from where he intends to cut corners to meet this deficit by reducing the VAT. Does he intend to recover it from the education sector, health sector or salaries of soldiers? This year we have paid Rs. 747 billion as repayment of loans borrowed by the Rajapaksa regime in 2014,” said Minister Samaraweera.

State Finance Minister Eran Wickramaratne said that it is not unusual for political candidates to make such irrational nonsense and promises during the election period.

Explaining the orderly process existent in the Finance Ministry to deal with financial issues he said, “60 years ago we posted a primary balance then for the second time a primary balance was posted six years ago and the third time a primary balance was posted was in 2017-2018. Now we are in an election year in 2019 and we are estimated to post a primary balance in 2019 as well.”



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