Tax talk takes centre stage

• President says he will not support VAT hikes that will burden people 
• Insists experts who recommend tough measures “will be sent home”
• Top Govt. team in Washington continues talks with IMF 
• Sirisena to attend G7 summit in Japan, eye on attracting foreign investment

Taking the issue of the pending VAT hike head-on, President Maithripala Sirisena yesterday pledged he would not support any efforts to tax increases that would be a burden on the people. 

Making his first public address following the New Year, President Sirisena was adamant the VAT increases expected to be implemented on 2 May would not make vulnerable groups tighten their belts.    

“I will never allow an increase on any tax which will oppress the poor masses of the country. If there are any economic experts who present such proposals, I am not ready to get their advice for the economic program of the country and on the contrary I will send them home,” he told a gathering in Polonnaruwa.  

He pointed out that the policy of the current Government was to provide the public relief by giving them economic benefits as a government of the ordinary people. The planned VAT increase from 11% to 15% takes place in the backdrop of ongoing talks between top officials of the Government and the International Monetary Fund (IMF). 

President Maithripala Sirisena

Finance Minister Ravi Karunanayake, currently attending the Spring meetings of the IMF and World Bank Group in Washington, will continue discussions with the IMF on obtaining financial assistance this week. 

The Sri Lankan team including Governor of Central Bank Arjuna Mahendran and Secretary to the Treasury Dr. R.H.S. Samaratunga will continue discussions toward a staff level agreement on an economic program that could be supported by a 36-month Extended Fund Facility (EFF) after the IMF review mission concluded their meetings in Sri Lanka earlier this month.

Karunanayake told reporters in US that the IMF had not placed any conditions on the funding, a point that was reiterated by President Sirisena. 

“The new Government will go forward as a people-friendly Government without turning back. We are committed to the people,” he emphasised.

Sirisena has also been invited to attend the 42nd Group of Seven (G7) summit which is scheduled to be held in Japan next month where the Government is expected to continue its efforts to attract foreign investment to Sri Lanka. 

The 42nd G7 summit will be held on 26-27 May in Kashiko Island, Shima, Mie Prefecture, Japan. Leaders of G7 member states – Canada, France, Germany, Italy, Japan, UK, USA – and representatives of the European Union will attend the summit.

Minister Mahinda Samarasinghe told reporters on Monday the invitation to President Sirisena was an important opportunity to showcase the change that had taken place in Sri Lanka to the world.

Addressing a media briefing held in Colombo, the Minister said the President has received this invitation as a result of the efforts taken by the present Government to create reconciliation in the country during the last one-and-a-half years which have been commended by the international community as well.

The Sri Lankan President will have the opportunity to hold discussions with Heads of States of the seven powerful industrial nations in the world as well as the leaders of the Europe Union. Minister Samarasinghe insisted the meetings could bring immense benefits to the country.

The G7 Ise-Shima Summit will be the first summit held in Asia in eight years and the outreach meeting will engage in discussions that explore what is needed to sustain the well-being of Asia, which is steering economic growth as the growth centre of the world.

With this perspective, the hosting state, Japan has invited the Heads of State and Government of Laos, Viet Nam, Indonesia, Bangladesh, Sri Lanka, and Papua New Guinea.