Prasad clarifies false information regarding VAT increase
He said upgrading the health care services and increasing social welfare assistance would depend on the Government’s ability to secure the finances.
Speculation about a possible increase in Value Added Tax (VAT) was highlighted by retired teacher Ramesh Raman. However these claims was clarified by the Minister for Finance Biman Prasad. This was during the National Budget consultations at the Veisaru Sanatan Dharam School in Ba on Thursday.
Mr Prasad thanked Mr Raman for inquiring about the VAT before he explained its process.
“From 2011 to 2016 the VAT rate was 16 per cent in case some people don’t remember and if you remember in 2014, I was talking about reducing VAT from 15 to 10 per cent. That time there was no exemption on basic food items,” he said.
He said in 2016, the VAT percentage was reduced to nine per cent by the previous Government.
“Then after COVID they brought three rates, zero rate on some basic food items, nine per cent on some items and 15 per cent on other items so already there is 15 per cent, already there is nine per cent , already there is zero per cent,” he said.
He said the Government wanted to rationalise that because it was creating a lot of problems for businesses and collection of revenue.
“We are seeing that its not working well, so we are working towards making sure that we rationalise that so we can only have two rates,” he said.
“We can have zero, 10,11,12,13,14 depending on how we work out what is the revenue that we need. We are also looking at corporate taxes because we believe that the corporate sector needs to perhaps pay more and many of them are happy to pay a little more tax .”
He said upgrading the health care services and increasing social welfare assistance would depend on the Government’s ability to secure the finances.
“All these rumours that VAT is going to be increased, there is a 15 per cent that is already there, there is a nine per cent there, there is a zero per cent VAT there, so in the budget we will be careful,” he said.
He said Government would ensure that if the increase in taxes was seen to have effects on the poor and low-income earning families, then financial support would be provided through social welfare assistance and agriculture incentives.