Lowering of VAT threshold will increase cost of living: Harsha

• Says small businesses will pass the burden onto the consumers and the cost of living will increase as a result of this move  

By Yohan Perera and Ajith Siriwardana  

The proposal by the government in Budget 2026 to lower the Value Added Tax (VAT) threshold to Rs 3.6 million from Rs 5 million will increase the cost of living, Samagi Jana Balawegaya (SJB) MP Harsha de Silva said over the weekend.   
“Instead of using this 1 trillion rupee surplus to provide relief, the government is increasing the tax burden, they have widened the VAT net by lowering the threshold from 5 million to 3.6 million rupees per month (a mere 100,000 rupees a day), hitting small businesses directly” Dr. De Silva told Parliament over the weekend.   
“The small businesses will pass the burden onto the consumers. The cost of living will increase through this move “ Dr. De Silva said.   
Also, he warned that the government has secretly agreed to implement a new wide ranging property tax which will be rolled out in the first quarter of 2027.   
While I support the anti-corruption talk, I pointed to new procurement irregularities, such as a tender for 1,775 double-cabs where the mandatory bid period was allegedly and improperly cut from 42 days to just 12.   
“Finally, the budget fails our senior citizens. There is no progress on a pension for the non-formal sector. Worse, I allege the government secretly agreed with the IMF to stop the interest subsidy for senior citizens’ fixed deposits by the end of this year—a crucial fact omitted from the budget speech. In conclusion, my analysis positioned this 2026 budget not as a vehicle for change, but as a document of broken promises. It fails to address the real needs of the youth, the elderly, and the nation’s key economic drivers.,” he added.