To find the necessary finances to payback former President Mahinda Rajapaksa’s Rs. 1.3 trillion loan, the Yahapalanaya government says it is compelled to slap the public with an additional four percent Value Added Tax (VAT).
Cabinet spokesman and Minister Rajitha Senaratne said that that the 15 percent VAT which will come into effect soon will however be imposed only for a period of nine months, after which the government will take steps to simplify the tax.
“This is temporary,” he claimed.
Senaratne also said that both the World Bank and the Asian Development Bank have come forward to lend the government US$ 6 billion to payback Rajapaksa’s loan.
He claimed that the previous government had obtained loans through various state banks and now this government had to figure ways to pay off these loans and hence they are compelled to burden the public by increasing taxes.
Meanwhile the 15 percent VAT will also be imposed on private health services other than diagnostic tests, dialysis and OPD services. The amended VAT bill was approved by the Cabinet yesterday. Earlier, the government presented the VAT bill in Parliament however the Supreme Court ruled it as null and void as the government had not followed due process when presenting it to Parliament.