By Lahiru Pothmulla While respecting Monday’s Supreme Court order given preventing the implementation of the recent revisions made to the Value-Added Tax (VAT) and Nation Building Tax (NBT), Finance Minister Ravi Karunanayake said the increased amount would be charged without a snag with effect from May 2, once the parliament approval was obtained for the tax increase on July 23. Addressing a news conference at the ministry on Monday afternoon following the court order, the minister said the court order had only suspended the charging of the recent VAT increase and clarified the suspension would only be applicable till the court makes another order or till parliament approves the tax increment inclusive of the 4 percent increase in VAT.
“The next court hearing is on December 6. However, the next parliament session is on July 20 and the debate and vote on VAT increase would be taken up on July 23. When Parliament approves the increment, the increase will be applicable from May 2 as a retrospective law,” he said. However, he said the court order is such that no tax increase could be charged with effect from today (12) until the parliament approval is given p o s s i b l y o n July 23. “ C h a r g i n g the increment till then is a violation of the court order. If companies continue to charge it, we will have to take the necessary actions. Nevertheless, the increment would be charged altogether from May 2, once the parliament approval is given,” Karunanayake reiterated.
When asked whether he was disappointed over the court decision, he responded saying the government doesn’t need to hide the fact that the order makes things complicated. “We respect the democracy but it makes lives difficult for a government,” he said. Karunanayake said charging the tax increment without the parliament consent was not illegal since a gazette had been issued enabling the increment previously.
However, he accepted that there was a delay in the process of presenting the bill in parliament and getting its consent. “There was a delay by the Attorney General’s (AG) Department’s side,” he said.
Meanwhile, he said the revenue expected from the tax increase was commendable and the government had achieved the tax revenue target for the month of June. “We have collected the expected revenue of 35 percent of the total state income as per the budget,” he said. Commenting on the reports that the prices of essential goods and services have been increased as a result of the VAT increase, Karunanayake said that people can witness whether the prices would come down now since the increase would not be applicable for a few days.
PM says no impact on tax collection
M e a n w h i l e , P r i m e M i n i s t e r R a n i l Wickremesinghe said that the Value-Added Tax (VAT) (Amendment) Bill was presented to parliament for the first reading last week and the second reading is expected on July 23. “The interim order is not expected to have any adverse impact on the government revenue,” Wickremesinghe said in a statement. “The unity government, which has a clear majority in parliament, expects the legislative process to be completed before the end of July 2016. The revised rates will be applicable with effect from May 2.” The government has hoped to raise Rs.100 billion during 2016 through the tax hikes.