VAT TO BE REDUCED BY 2.5% IN 2020

Even after 70 years of independence, Sri Lanka could not achieve peace as our people were still quarreling on the basis of race, religion and party politics, Minister of Finance and Mass Media, Mangala Samaraweera told guests at a ceremony to award Letters of Appointment to 68 Assistant Superintendents of Customs at the Finance Ministry auditorium last week.

Around 10,000 candidates had sat and 227 had passed the exam. Sixty eight were selected for the post after an extensive interview process.

Sri Lanka, at the time of independence was perceived as a country which could set a precedence in the Asian region. At that time a newspaper in Britain had carried an article saying that ‘Ceylon could emerge as the Switzerland of Asia’, he said.

The Minister said that during the first month after the new Inland Revenue Act was implemented, around 46,000 new tax files were opened and he appreciated the generosity of the people for opening tax files voluntarily.

He said that the Customs and the Inland Revenue Department are the two main departments that bring revenue to the Government. The Customs Ordinance we have is over 200 years old, introduced during the reign of Queen Victoria and therefore a new Customs Act would be brought to Parliament before the next budget he said.

“It is the poor people who mostly pay taxes to the Government by way of indirect taxes. We should relieve them of this burden. Therefore, I expect to reduce the VAT by 2.5% in the year 2020,” declared the Minister.

Minister Samaraweera said that even after 30 years of war, certain forces were trying to create an authoritarian rule under the guise of the war. But, fortunately the revolutionary forces could change the destiny of the country in 2015. Now, the country has been revived on three pillars, which are democracy, reconciliation and development.

He said that democracy has been restored in the country at seven star level where anyone can now criticise the President and the PM. University students can hold street protests without any fear of being abducted in white vans. Though some elements try to create divisions on racial grounds, this Government would not allow the recurrence of such a situation in the country. The Minister while stressing on the importance of actively contributing to the economy by way of revenue collection, said that this Government was left with a debt-ridden country when it came to office.

But the Government has been able to manage the debt servicing by increasing the national revenue making it possible to meet the recurrent expenditure.

He said that after Independence in 1948, the highest amount of debt servicing, has to be paid in 2018. The total foreign debt to be paid this year is US$ 2,845 million and of which US$ 1,789 million has to be paid for Government borrowings done before the year 2015. Only an instalment of US$ 1,056 has to be paid for the foreign loans borrowed after 2015.

Accordingly, 63% of debt instalments to be paid this year are repayments of loans that had been borrowed during Mahinda Rajapaksa’s tenure as Finance Minister. It was at the level of 75% in 2017.

This situation would worsen further next year. US$ 4,285 million have to be paid in 2019 and of which UD$3,315 or 77% of the repayment is for the loan obtained during the tenure of the Rajapaksa regime.

Another US$3,768 million will have to be paid as loan instalments and the interest in 2020 and of which 77% or US$2,905 million are the loans that were borrowed before 2015.

Only US$ 863 million have to be paid for the loans which were borrowed after 2015. In 2021, 83% of the foreign debt instalments will have to be paid to repay the loans taken before 2015. In addition, even in 2030, 73% of the repayments will go to pay the loans that were obtained during the Rajapaksa regime for the waste, fraud and corruption committed by the oligarchies of the Rajapaksas.

The Secretary to the Ministry of Finance, Dr. R.H.S. Samaratunge said that the import export process is vital for the economic development of the country.

Therefore, he said that once the Single Window handling system is in place at the Sri Lanka Customs, the transaction cost of the goods and service would come down.