There are two agencies granting tax exemptions - the Department of Inland Revenue in the Finance Ministry and the BOI. Only ministries will be authorised to grant tax exemptions from today. Only two institutions responsible for collecting state revenue will be authorised to provide tax exemptions. The Finance Minister is the one who is answerable to Parliament,” he said.
Speaking about the government revenue generation, he said the government was aiming at increasing tax revenue to 20 percent of Gross Domestic Production (GDP).
“Currently it is at 12 percent and we need to change this and increase it to at least 15 percent like in India. Since our knowledge on tax revenue generation is low, a special IMF team will arrive in the island to advice on how to increase the tax revenue,” the Prime Minister said.
However, Minister Dr. Sarath Amunugama said reforms now being implemented are not conditions of the possible IMF funding assistance. “These are strategies proposed by economic experts. Experts from the IMF, Finance Ministry and the Central Bank all use the same theories and recommend similar action to be taken,” he said.
Dr. Amunugama said the VAT increase will not affect any essential commodities or services.
He said education and health services are provided free of charge by the government.
“Those who access private service providers have the capacity to withstand the increase in VAT. There are alternative sectors that have developed in these two fields providing private services. We have not prohibited them; we have only increased the existing tax from 12 to 15,” he said. (CDN)
