Govt. discusses turning off VAT for water bill

Wednesday, 11 May 2016 00:36 -     - {{hitsCtrl.values.hits}}

By Chamodi Gunawardana

Pressured by a disgruntled public, the Government has decided to discuss the possibility of exempting water bills from the Value Added Tax (VAT) increase, Special Projects Minister Dr. Sarath Amunugama said yesterday, possibly adding it to electricity, medicine and essential food items.

Speaking at the Sri Lanka Freedom Party (SLFP) weekly media briefing, Dr. Amunugama said increasing taxes on water bills was under discussion by the Government and acknowledged it may be difficult for the public to absorb.

“Several parties have requested the Government to review the decision to add VAT to water. The Government is still examining whether the water bill should include or exempt VAT,” he said.

Despite detractors criticising the move as increasing inflation, the Minister insisted VAT would not have a significant impact on low income earners due to their minimal consumption. 

“We have exempted vital food items from VAT, which is more essential for low income earners,” he argued. “They will not be affected much by VAT on water bills. People who consume luxury food items such as cheese and butter will be more impacted by VAT.”

Countering charges that VAT has exponentially increased commodity prices in Sri Lanka and failed to pass on the benefit to the consumer, Dr. Amunugama noted a range of goods including dhal, coconut, wheat flour, sugar, bread, gas, petrol, diesel, kerosene oil and coconut oil prices have decreased since the new Government came into power when compared with the situation in 2013.

Responding to questions on whether the Government intended to remove VAT on telecommunication charges, Amunugama said due to the huge usage of mobiles the Government could not exempt VAT on telecommunication as it would mean foregoing a large amount of revenue.

Commenting about the recommended Rs. 2,500 increment for private sector employees, Labour and Trade Union Relations Minister W.D.J. Seneviratne said the plantation sector was likely to see a delay in the increment.

“Plantation owners have informed me they would not be able to pay the increment due to declining profits. I have conducted several meeting with them to stress the importance of paying the increment and I expect they will implement it as soon as possible,” he stated.

Seneviratne said Rs. 2,500 should be added to the April salary of other private sector employees.