The masses may have to tighten their belts much more next year, with the government expected to increase the Value Added Tax (VAT) from 11% to 15% with the next budget. According to State Minister of Finance Lakshman Yapa Abeywardena, the VAT increase is likely to be announced when the government presents its budget later this year.
The budget for 2017 will be presented in mid-November. The VAT increase is currently on hold after the Supreme Court announced that the VAT Bill which was presented in Parliament recently was null and void as due procedure was not followed when presenting the Bill.
In April this year, Prime Minister Ranil Wickremesinghe made an announcement in Parliament that the VAT will be increased from 11% to 15% May with effect from May. However, following a petition by Opposition MP Wimal Weerawansa; the Supreme Court issued an interim order suspending the tax increase mid-July. The tax increase was to become affective after the Government passed the VAT Bill in Parliament, however the government suffered yet another setback when the Supreme Court ruled that the government had not followed the correct procedure when presenting the Bill in Parliament.