VAT Slips?

From left: Dr. Fernando Im, Senior Country Economist for Sri Lanka and the Maldives, The World Bank, Hon. Eran Wickramaratne, State Minister, Ministry of Finance and Mass Media, Dr. W A Wijewardana, Former Deputy Governor of the Central Bank of Sri Lanka, Prof. Indralal de Silva, Former (Chair) of Demography, University of Colombo, Prof. Amala de Silva, Department of Economics, University of Colombo at the panel discussion on "Demographic Change in Sri Lanka" moderated by Dr. Ramani Gunatilaka, International Centre for Ethnic Studies.

The Value Added Tax continues to disappoint with revenues again falling short of expectations, with rising refunds eating away at collection.
ldblquote Refunds under the of input credit under GST/VAT has increased from 12 per cent in 2002 to 14 per cent in 2003,
dblquote Finance Minister K N Choksy said making his comments on the governments first mid year Fiscal Report for 2003.rn

rnVAT with its input credit is considered a better tax, without the so-called cascading effect. But the very feature, which makes it a yield lower than buoyant taxes like the National Security Levy and Turnover Tax.rn

rnTax experts originally recommended a uniform value added tax of 17.5 percent to replace the earlier high yielding TT but the PA chickened out and came out with a lesser rate of only 12.5 percent.rn

rnThe UNF administration raised the rate of some items to 20 and put more politically sensitive items at 10 per cent.rn

rnThe latest slippages are coming from industries like leasing and construction, whic