Higher taxes further inflate price tags of home appliances and electronics
Uncertainty continues in the electrical and electronic items market in view of the revision of the Value Added Tax (VAT) in January.
Vendors and businessmen expressed concerns over price fluctuations and reduced purchasing power as salaries have not increased relative to the cost of living.
Merchants expect sales to drop as the prices of newly imported electrical items rise due to VAT.
They also expect greater availability of electronic items as most import restrictions have been removed.
Meanwhile, with the soaring cost of living, the construction industry has been badly hit, as people have no financial strength to construct houses or buildings.
Therefore, companies marketing wiring items and other electrical accessories such as switches, bulbs, holders, and switchboards have fewer jobs and sales.
Newton Rodrigo, a manager of an electrical shop that specialises in light bulbs, CFLs, and LED lamps in the Fort, told the Sunday Times that the Government was adding more burden on consumers by imposing a high VAT and higher electrical bills.
He said the Government should take measures to reduce electricity demand and promote energy-saving bulbs, such as LEDs, for homes through incentives.
“Now people are charged a high electricity bill and are to be charged 18% VAT for purchasing energy-saving LED lights,” Mr. Rodrigo said. He said the incomes of most people have not increased, and they deserve a concession for at least switching to LEDs in their homes.
He said people seldom purchase bulbs and electrical wire as they find it difficult to afford repairs or new construction. Sales of electronic items have dropped.
Some merchants selling electronic items and accessories said speakers, amplifiers, and chargers are in demand. Electric ovens and rice cookers mostly remain on display. People ask about prices and leave.
The salesman said items bought at high prices during the economic crisis could not be sold at lower prices.
Mohamed Yaris, a sales executive at an electrical items shop that sells inverters, induction cookers, speakers, microphones, and TV spare parts, said they don't know what to do with the unsold stocks.
“VAT and the cost of living may increase, yet we cannot increase the prices of the items that we purchased before the VAT increase. Also, we cannot import items without knowing how the VAT would be imposed and how the customers would react; this is the dilemma we face,’’ he said.
He said people mostly tend to repair items instead of purchasing new ones.
Mr. Yaris added that people were unable to afford high-quality items, but they were also aware that buying inferior-quality products would be a financial loss as they might have to spend more money on repairs or replacements.
Sales of electronic items during the ongoing year-end festive season have not picked up compared with previous years.
Salesmen claimed that the US dollar exchange rate as well as import restrictions caused overpricing, yet even with the lifting of the import restrictions, prices would remain high as VAT would be added in January.
Electronic items shop salesman R. Prasad, 33, said that sales during the festive season had fallen. He added that it is difficult to comprehend how the VAT would affect sales.
Computer parts and electronic recorder seller A. Lathiff said that even without the VAT increase, prices would have increased.
He added that retailers increase prices as wholesale prices rise.
“We cannot afford to bear losses;
Merchants expect sales to drop as the prices of newly imported electrical items rise due to VAT. They also expect greater availability of electronic items as most import restrictions have been removed
therefore, a keyboard we sold for Rs 800 is now Rs 1,800, and a subwoofer we sold for Rs 6,000 is now sold for Rs 15,000. Therefore, with the VAT increase, prices would further increase,’’ he said.
Leading electronic item companies that sell branded items too are selling televisions for between Rs 60,000 and Rs 85,000.
The prices of ovens and electric clothes irons range from Rs 20,000 to Rs 25,000, while the price of automatic washing machines is between Rs 200,000 and Rs 400,000.