Former President Mahinda Rajapaksa yesterday rejected the Governments’ justification that the VAT increment was necessary to pay off the loans taken by the former Government.
He was referring to advertisements in media stating that the increment was necessary to settle the loans taken his Government.
Issuing a statement, Mr. Rajapaksa said they had always ensured that the borrowings were kept within manageable limits.
Mr. Rajapaksa said it could be seen that the increase in the Value Added Tax (VAT) had run into a great deal of opposition country wide.
He also said the owners of small and medium businesses and traders in many towns, had come out onto the streets, against this tax increment with the support of the general public.
“It should be borne in mind that my Government did not take loans for consumption. We obtained loans to carry out the war against terrorism and to develop infrastructure, which can be used by our people for decades if not centuries,” he said.
“What we have built can be seen all over the country. Leaders of this Government are still opening only the projects that my Government commenced. One Minister publicly acknowledged this fact recently. Whenever we took out any loans for a project, it was done carefully in a planned manner, which is why we never had to contend with an unmanageable piling up of debt,” he added.
He said the Government was looking for more ways to tax the people.
He also said that the Government had announced that a Capital Gains Tax would be introduced in the coming weeks on the grounds that people had accumulated a lot of wealth in the recent past and that this should be taxed.
“It is ironic that while insisting that I ruined the economy, this Government says in the same breath that people had earned a lot of wealth during my tenure, which has to be taxed.
“When ordinary people hear the phrase ‘Capital Gains Tax’ they may assume that this is a tax levied only on rich people, who own capital,” he said.
“But what is meant by capital in this case is property owned by anybody.
“If a farmer, labourer or schoolteacher disposes of his land or house, he will have to pay a tax on the difference between the price at which he bought it and the price at which he sold it. The Capital Gains Tax is no less objectionable than the VAT and NBT increase,” he added. (Kelum Bandara)