May 25, 2018 (LBO) – Sri Lanka will reduce Value Added Tax (VAT) by 2.5 percent in 2020 in order to relieve masses of the burden of indirect taxes, Minister MangalaSamraweera said.
“It is the poor people who mostly pay taxes to the government by way of indirect taxes. We should relieve them of this burden,” he said.
“Therefore, I expect to reduce the VAT by 2.5 percent in the year 2020.”
The Minister of Finance and Mass Media Mangala Samaraweera said that even after 70 years of Independence, country could not achieve peace as the people were still quarrelling on the basis of race, religion and party politics.
Sri Lanka at the time of independence was perceived as a country, which could set a precedence to countries in the entire Asian region.
At the time of independence, a newspaper in Britain had written an article saying that Ceylon could emerge as the Switzerland of Asia.
Minister Mangala Samaraweera made this observation when he addressed a simple ceremony to award letters of appointments to newly selected 68 Asst. Superintendent of Custom officials at the Finance ministry auditorium on Wednesday.
Around 10,000 candidates had sat for this exam and 227 had passed the exam. 68 were selected for the post of Asst. Superintendent of Customs after an extensive interview process.
The Minister, referring to the new Inland Revenue act said that during the first month after the new act was implemented, around 46,000 new tax files were opened and he appreciated the generosity of the people for opening tax file voluntarily.
He added that the Customs and the Inland Revenue Department are the two main departments that brings revenue to the government. The Customs Ordinance we have is over 200 years old, introduced during the reign of Queen Victoria and therefore a new Customs Act would be brought to Parliament before the next budget he said.
The Minister further said that even after the 30 years of war, certain forces were trying to create an authoritarian rule under the guise of the war. But, fortunately the revolutionary forces could change the destiny of the country in 2015. Now the country has been revived on three pillars, which aredemocracy, reconciliation and development.
The minister also said that Democracy has been restored in the country at 7 Star level where anyone can now criticize the President, the PM. University students can hold street protest without any fear of being abducted in white vans. Though some elements try to create divisions on racial grounds, this government would not allow the recurrence of such a situation in the country.
The Minister whilst stressing on the importance of actively contributing to the economy by way of revenue collection, said that this government was left with a debt-ridden country when it came to office. But the government has been able to manage the debt servicing by increasing the national revenue making it possible to meet the recurrent expenditure.
The Minister further said that after Independence in 1948, the highest amount of debt servicing has to be paid in 2018. The total foreign debt to be paid this year is US$ 2,845 million and of which US$ 1,789 million has to be paid for government borrowings done before the year 2015. Only an installment of US$ 1,056 to be paid for the foreign loans borrowed after 2015. Accordingly, 63% debt installments to be paid this year are repayments of debts that had been borrowed during Mr. Rajapaksa’s tenure as finance minister. It was at the level of 75% in 2017.
This situation would further worsen next year. US$ 4,285 million have to be paid in 2019 and of which UD$3,315 or 77% of the repayment are for the debt obtained during the tenure of the Rajapaksa regime.
Another US$3,768 million will have to be paid as loan installments and the interest in 2020 and of which 77% or US$2,905 million is the debts that were borrowed before 2015. Only US$ 863 million have to be paid for the debt that was borrowed after 2015. In 2021, 83% of the foreign debt installments will have to be paid to repay the debt taken before 2015. In addition, even in 2030, 73% of the repayments will go to pay the debt that were obtained during Rajapaksa regime for the waste, fraud and corruption committed by the oligarchies of the Rajapaksas.
The Secretary to the Ministry of Finance Dr. R.H.S. Samaratunge said that the import export process is vital for the economic development of the country. Therefore, he said that once the Single Window handling system is in place at the Sri Lanka Customs, the transaction cost of the goods and service would come down enabling the entrepreneurs to compete favorably in the international trade. Deputy Secretaries to Treasury Ms.ChandraEkanayake and Mr.A.R. Deshapriya and the Director General of Customs P.S.M Charleswere also present on the occasion.