“Until now VAT was not levied on wholesale and retail trade. However, VAT is levied now for retail trade that has a turnout of Rs.300,000 for a quarter. This means VAT has to be paid if the daily income of a retail shop is above Rs.33,333.00. VAT means Value Added Tax. This tax is levied against the principles of taxation. Value cannot be added when a good is bought and sold.
A retail shop merely sells goods. Value added means what is added to a thing that is newly produced. Hence, levying tax on wholesale and retail trade is against the principles of taxation. This is a very serious situation,” says the Information Secretary of the JVP Vijitha Herath addressing a press conference held at the head office of the JVP at Pelawatta today (24th).
Mr. Herath said, “The present coalition government is attempting to burden the people with a new round of taxes to maintain wasteful spending for their high level living. We are holding this press conference to brief the media regarding this act of the government, to reveal the latest bond fraud of the Central Bank and to apprise regarding our May Day demonstration and the rally.
With the dawn of New Year the VAT is increased.
Despite the government proposing in the budget to levy the VAT in several ratios, the Prime Minister said in Parliament that 15% VAT would be levied for all goods and services. The gazette notification regarding this has not been published yet. However, the Ministry of Finance informed the Department of Inland Revenue on 11th April in writing that the VAT that was at 11% should be increased to 15%. Also, VAT has been levied for several goods and services for which VAT had been exempted earlier.
The letter sent by the Secretary to the Ministry of Finance R.H.S. Samarasinghe to the Commissioner of the Department of Inland Revenue clearly states every business which has a turnover of more than Rs.3 million in a quarter would come under VAT. Among the services for which VAT was not levied until now were telecommunication service and all telecommunication equipment. Nation Building Tax has been added to electricity. New taxes are levied for education and health services. For example from a telephone bill earlier the Cess tax was 2% and telecommunication tax was 25%. The total tax was 27%. However, with the new taxation 2% of Nation Building Tax and 15% VAT would be added. The total amount of tax paid would be 44%. The tax for Rs.100 re-load would be Rs.44. Also, 2% more would be added to international calls. When spending Rs.100 for a call the real charge for the call is Rs.56. The balance Rs.44 is the tax burden forced on the people.
This is how the government has burdened the people with tax. When presenting the budget the government said the direct tax that was 20% would be increased to 40% and indirect tax that was 80% would be brought down to 60%. However, what has happened today is that the direct tax levied from those who receive the highest income has come down and due to introducing VAT and other taxes to goods and services the ratio of indirect tax has been increased to 90%.
The government carried out an entirely different thing to what they had stated. The farmer, fisherman, the self employed and all others are being oppressed with a massive tax burden. The tax burden would fall on people’s heads the day after they commemorate the International Workers day on 1st May. The Minister of Health says the taxes levied from private hospitals and private educational institutes would be spent for the development of the two sectors. This is indeed a falsehood to deceive the people. This would not be approved by the working masses of this country. Also, the JVP demands the government to immediately withdraw the tax that was increased. A building is rented out for the Ministry of Agriculture paying a monthly rent of Rs.20100000 while the Telecom Chairman is paid a monthly rent allowance of Rs. 750000. We condemn oppressing the masses while the government carries out wasteful spending unabated. The people in this country are not prepared to tolerate such a massive injustice.
Until now VAT was not levied on wholesale and retail trade. However, VAT is levied now for retail trade that has a turnout of Rs.300,000 for a quarter. This means VAT has to be paid if the daily income of a retail shop is above Rs.33,333.00. VAT means Value Added Tax. This tax is levied against the principles of taxation. Value cannot be added when a good is bought and sold. A retail shop merely sells goods. Value added means what is added to a thing that is newly produced. Hence, levying tax on wholesale and retail trade is against the principles of taxation. This is a very serious situation.”
