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Sajith claims VAT hike will shrink economy
ECONOMYNEXT –Opposition and SJB leader Sajith Premadasa has accused the government of shrinking the economy through its proposal to increase value added tax (VAT) to 18 percent, claiming that it will reduce spending and investments.
Speaking at an event on Friday November 03, Premadasa said Sri Lanka is experiencing a shortage in both dollars and rupees.
“This is a problem. But it can be resolved through economic growth, not through economic shrinkage,” he said.
“This government is shrinking the economy. By increasing VAT, they’re trying to pickpocket the pittance in your hand,” claimed Premadasa.
The increase in VAT, he said, will result in a reduction in spending and investments as people will have less money to spend.
“A country cannot succeed by shrinking the economy. The economy must be grown,” he reiterated, claiming that a future government headed by the main opposition party the Samagi Jana Balawegaya (SJB) will bring about an “era of productivity and exports”.
Earlier in the week, during a discussion with university lecturers on Wednesday November 01, Premadasa claimed that the proposal to increase VAT by 18 percent in 2024 was a distortion of Sri Lanka’s tax formula.
President Ranil Wickremesinghe, meanwhile, defended the proposed VAT hike, amid confusion over how Sri Lanka plans to finance a proposed salary increase for state sector workers in the face of an ambitious 2.3-percent primary surplus target.
Speaking at the National Industry Excellence Awards 2023 on Wednesday, Wickremesinghe acknowledged that the decision to increase VAT was a challenging one, driven by the “need to maintain economic stability”.
The public, particularly the working and underprivileged classes, will have to bear the burden of this “regressive” tax hike, he said.The salary hike for state sector workers is to be proposed in the upcoming budget for 2024, with President Wickremesinghe also promising to request the private sector to increase salaries of employees following an unprecedented rise in commodity prices due to inflation triggered by 2022’s currency crisis.
There is also an ongoing campaign of agitation by state sector unions demanding a 20,000-rupee salary increase. Government spokespersons have not provided specifics on the salary increased that will be proposed in the budget.
Sri Lanka’s deal with the International Monetary Fund (IMF) includes an agreement to achieve a primary surplus of 2.3 percent of the gross domestic product (GDP) by 2025.
It is against this backdrop that President Wickremesinghe’s administration has increased personal income tax and now also plans to hike VAT by a significant margin, despite protests from unions and increased levels of migration.
News
Heat index at ‘Caution level’ in Northern, North-central, Eastern, North-western, Western provinces and Monaragala district today [09]
The Natural Hazards Early Warning Centre of the Department of Meteorology has issued a Warm Weather Advisory for 09 April 2025
The public are warned that the Heat index, the temperature felt on human body is likely to increase up to ‘Caution level’ at some places in Northern, North-central, Eastern, North-western, and Western provinces and in Monaragala district.
The Heat Index Forecast is calculated by using relative humidity and maximum temperature and this is the condition that is felt on your body. This is not the forecast of maximum temperature. It is generated by the Department of Meteorology for the next day period and prepared by using global numerical weather prediction model data.
Effect of the heat index on human body is mentioned below is prepared on the advice of the Ministry of Health and Indigenous Medical Services.
ACTION REQUIRED
Job sites: Stay hydrated and takes breaks in the shade as often as possible.
Indoors: Check up on the elderly and the sick.
Vehicles: Never leave children unattended.
Outdoors: Limit strenuous outdoor activities, find shade and stay hydrated. Dress: Wear lightweight and white or light-colored clothing.
Note:
In addition, please refer to advisories issued by the Disaster Preparedness & Response Division, Ministry of Health in this regard as well. For further clarifications please contact 011-7446491.
Prof. Jayasumana raises possibility of Lanka ending up with “Quad’
Opposition and SJB Leader Sajith Premadasa has said it is the responsibility of the NPP government to submit the MoUs/agreements that were recently signed with India to the respective Sectoral Oversight Committees (SOCs).
Premadasa said so when The Island raised the issue with him. He said that during his meeting with Premier Modi his focus had been on opening the Indian market for Sri Lankan garment exports.
The seven MoUs/agreements signed on 05 April included defence cooperation, energy, Eastern Province development and digitalisation.
Meanwhile, the Vice President of Sarvajana Balaya and former lawmaker Prof. Channa Jayasumana said that the government owed an explanation whether the recently signed MoU on defence cooperation directly or indirectly attached Sri Lanka to the Quad security alliance, consisting of the US, Australia, Japan and India.
The former SLPPer raised the issue at a meeting held at Boralesgamuwa on Monday (07) in support of Sarvajana Balaya candidates contesting the May 6 LG polls.
Prof. Jayasumana urged that the MoU on Defence Cooperation be placed before Parliament, and the people, without further delay. The academic who served as State Health Minister during President Gotabaya Rajapaksa’s tenure said that President Anura Kumara Dissanayake’s foreign policy direction should be dealt with.
By Shamindra Ferdinando
The government would not extend the suspension of ‘parate executions’ that was now effective, Deputy Minister of Finance Harshana Suriyapperuma told Parliament yesterday.
Suriyapperuma said so in response to a question raised by Opposition Leader Sajith Premadasa, who asked about the government’s plans regarding a relief package to assist small and medium-scale enterprises (SMEs) struggling to repay loans.
Pointing out that about 263,000 SMEs had closed down, Premadasa asked what action the government would take to address the grievances of these SMEs.
He said that from 01 Jan., 2019, to 01 Dec., 31, 2023, licensed banks had collected Rs. 113.7 billion through 2,263 parate executions. As of 31 Dec., 2024, Rs. 1,380 billion had been recovered from Stage III defaulters.
The government has introduced loan schemes to assist SMEs impacted by the economic crisis. They included capital loans of up to Rs. 10 million, with a six-month grace period and a three-year repayment term at 8% interest, Suriyapperuma said. Additionally, another loan scheme under the consolidated fund aimed to help SMEs that werecurrently paying their loans. That scheme offered loans of up to Rs. 15 million, which must be repaid over ten years with a one-year grace period and a 7% interest rate. For SMEs that had defaulted on their loans, a loan of up to Rs. 5 million is available at 8% interest, with a six-month grace period and a five-year repayment term, Suriyapperuma said.
By Saman Indrajith
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