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| Sunday, 4 August 2002 |
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Anti-VAT campaign : 'Do not be misled' - Choksy Finance Minister K.N. Choksy warns the general public not be misled by the sinister campaign to belittle the efforts of the government to reduce the rising cost of living with the two-tier Value Added Tax (VAT) system which came into operation on August 1. Minister Choksy said that the introduction of VAT replacing the Goods and Services Tax (GST) and National Security Levy (NSL) was intended to help the poor masses of this country. The primary objective of the new system of taxing is to bring down the "cost of living". The government is very optimistic that the prices of essential commodities and imports would now come down considerably, he said. Addressing a media conference in his Ministry on Thursday, Minister Choksy said that the main objective of the introduction of the VAT was to bring down the cost of living. "There is a sinister campaign to belittle the measures we have taken and mislead the public. There is also a misconception among people that VAT is harmful to the country and misguided elements are trying to create a negative picture about the newly introduced Value Added Tax (VAT). The public should be warned not to be misled by such propaganda", the Minister said. He also said that from the time the UNF came into power it adopted progressive measures to bring down the cost of living despite having a very difficult revenue position. "In March this year when we presented the budget we proposed to reduce the 40 per cent customs duty surcharge to 20 per cent and we did so. We brought down the interest rates of the banks. Recently the Ceylon Petroleum Corporation did away with the Loss Recovery Charge on diesel and petrol, the Minister pointed out. The Finance Minister explaining the new tax system said that 20 percent VAT would be applied to highly non-essential items and 10 per cent to items that are not so essential. Before the introduction of VAT, several goods and services were subjected to both 12.5 per cent GST and 6.5 per cent National Security Levy (NSL). Essential commodities such as rice, rice-flour, wheat, wheat-flour, bread, infant milk, pharmaceutical products and medical equipment had to be taxed, the Minister said. Deputy Finance Minister Bandula Gunawardana told the media that the government had taken the measures to bring down the cost of living sacrificing a considerable amount of revenue in terms of tax with the introduction of VAT. |
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