Opposition leader Sajith Premadasa 

• Calls VAT hike regressive and warns it will affect country’s underprivileged and working classes 
• Says Govt. current decisions mirror its lack of strength, ineffectiveness and inadequate governance
• Claims Govt. has no public mandate to impose a hefty tax increase 
• Announces SJB will not support imposition of such a tax burden on populace 

Opposition leader Sajith Premadasa yesterday accused the Government of distorting the country’s tax formula by its proposed 18% increase in the Value Added Tax (VAT) for next year. 

 “In the context of the regressive tax hike, the weight of heavy taxation will fall upon the general populace, particularly affecting the underprivileged and the working class in our country,” he said. 

Premadasa made these comments addressing a discussion with the Federation of University Teachers’ Association in Colombo yesterday.

The leader of the opposition pointed out that the Government’s choices mirror its lack of strength, ineffectiveness, and inadequate governance.

The opposition leader emphasised that during a period when the Government has struggled to boost state tax revenue significantly, it is now imposing the highest possible taxes on taxpayers and escalating both progressive and regressive taxes. “This approach, in effect, places the financial burden on the country’s citizens to compensate for the revenue shortfall caused by the Government’s limitations,” he noted. 

 “The present Government has not introduced any reforms in tax administration. Government revenue could be augmented by implementing digital, modern, and updated tax administration methods. The Government is endeavouring to generate tax revenue from the general populace without addressing tax evasion by granting tax concessions in a non-systematic and irregular manner,” he added.

The opposition leader noted that the Government is, in fact, diminishing state revenue instead of increasing it as required. 

“The act of burdening the general population by raising VAT to 18% in an attempt to boost Government revenue is a deplorable action,” he maintained. 

Premadasa raised doubts about the Government’s ability to levy a substantial tax burden on the population without a transparent public mandate. He pointed out that these decisions are being dictated by a temporary President elected with the votes of a limited number of MPs. The opposition leader stressed that the imposition of such a tax burden cannot therefore be supported.

Govt. hikes VAT to 18% to meet revenue targets set by IMF