Daily Mirror - Print Edition

Reduction of VAT- exempted list Government faces headwinds in Parliament

11 Dec 2023 - {{hitsCtrl.values.hits}}      


  • Debate ends abruptly due to no quorum
  • 2 percent impact on inflation
  • Rs.338 billion expected to be raised

By Yohan Perera   

The government faced headwinds in Parliament yesterday in its attempt to boost revenue by enacting a piece of legislation to reduce the VAT- exempted list from 138 categories of items to 97, a move that will have two percent inflationary effect.  The House was convened yesterday for a special session despite it being a Sunday, given the urgency to pass the bill which , if enacted , will pave the way for the government to collect as much as Rs. 338 billion to its coffers as part of its measures to increase revenue to 15 percent of the Gross Domestic Product (GDP) by 2025.   

Ahead of the possible approval of next IMF tranche soon , the government is under compulsion to reach its revenue targets according to the stipulated timeline .   

State Minister of Finance Ranjith Siyambalapitiya who started the debate tried to justify the move as something aimed at long term economic stability despite difficulties in the short run for people already grappling with a soaring cost of living . 

He said its impact on inflation could be offset by the proposed electricity price reduction and the fuel price drop in the world market.   
However, Samagi Jana Balawegaya (SJB) MP Dr. Harsha de Silva was not opposed to revenue generation in principle . Yet , he raised concerns about the inclusion of items such as fresh milk and agriculture implements for VAT despite their impact on public life .   

A debate ensued between the government and the opposition mainly on the absence of the list of 41 categories of items excluded from VAT.   

In the meantime , SJB MP for the Kurunegala District Nalin Bandara Jayamaha raised that there was no quorum in the House to proceed with the debate . Deputy Speaker Ajith Rajapakse who was presiding at the time ordered to ring the quorum bell for five minutes in keeping with the Standing Orders governing parliamentary businesses .   

The government was unable to keep the required number of MPs present in the House to maintain the quorum. Eventually , the Deputy Speaker adjourned the House till today. Including the presiding member, there has to be 20 MPs in the House as the quorum.   

It is viewed as a setback for the government. Later , Mr. Siyambalapitiya told Daily Mirror that a fresh date would be set for the debate in consultation with the party leaders.   
“All the MPs were supposed to be present by 4.30 pm when the bill was to be put to vote. But, the opposition raised the quorum issue and scuttled the debate. It is unjustifiable ,” he said.   

  •  “All the MPs were supposed to be present by 4.30 pm when the bill was to be put to vote. But, the opposition raised the quorum issue and scuttled the debate