The Special Commodity Levy imposed on a number of goods has seen a drastic increase in line with the decision to increase taxes under Article 2 of the Special Commodity Levy Act No.48 of 2007.
Accordingly, taxes imposed on imported food items, electrical appliances, vehicles parts and several other goods have been increased between 15 percent and 200 percent.
Accordingly, the Rs.1,000 special duty on a kilogram of imported yoghurt was increased to Rs.2,000 while the special duty of Rs.400 on a kilogram of all types of cheese was increased to Rs.600.
Steps have also been taken to increase the Special Commodity Levy on imported oranges from Rs.200 per kilogram to Rs.600 per kilogram.
The special duty on a kilogram of grapes and apples has also been increased from Rs.300 to Rs.600.
The tax on chocolate has been increased to 200 percent while the taxes on LED bulbs and decorative items have been increased by 50 percent.
Meanwhile, taxes on vehicles, motorcycles, and three-wheelers have been increased by 50 percent.
The tax imposed on air conditioners, washing machines, rice cookers, microwaves, refrigerators, and phones have been increased by 100 percent while taxes imposed on other electrical appliances have been increased by 15 percent.
The Ministry of Finance said the tax increase will remain in place for six months.
Yesterday, restrictions placed on the importation of 369 goods stipulated in the Extraordinary Gazette Notification issued on the 9th of March were relaxed.
Meanwhile, Senior Lecturer of the Department of Economics at the University of Colombo Dr. Indrajith Aponsu says the decision to increase the Value Added Tax from 8 to 12 percent is a major blow to the economy, manufacturers, and consumers.
When contacted by NewsRadio, Dr. Aponsu said there is uncertainty over whether the VAT increase is a policy decision taken due to pressure exerted by the International Monetary Fund.
He said the VAT could have been increased due to the government’s lack of an income and therefore VAT is essential adding the VAT however comes into play through daily consumers, while a question is raised if the government has no other alternative than increasing the VAT.
Dr. Aponsu stated that the government could have instead taxed large profit generating corporations that were granted significant tax concessions in the past, by introducing a new tax.
He noted that the positive and negative aspects of the VAT increase will be experienced in future adding that he believes there are many shortcomings.
Dr. Aponsu added the increase in the VAT will have a significant impact on inflation.
He said the government is of the view that the budget deficit must be bridged, especially owing to discussions with the IMF, adding that this move has led to the increase in the VAT.
Dr. Indrajith Aponsu said the VAT was increased during the term of the previous government between 2015 and 2019 as well, based on similar circumstances.
He noted in comparison Sri Lanka’s economic growth rate slowed significantly while smaller organisations were compelled to obtain loans as a result.