The Approval on finance bill intending at tax amendment on tobacco and reduction in Value Added Tax (VAT) was put off by the Committee on Public Finance of Sri Lanka.
The VAT is slashed down from 15 to 8 per cent. The Finance Committee sought justification regarding the VAT cut. The tax cut will be implemented by the Department of Inland Revenue.
It is concerning as the economy has just started recovering from the currency collapse in 2018 and Sri Lanka may face credit pressure.
State salary increase approved earlier was also called off due to the budget deficit prevailing.
The VAT on tobacco was reduced but exercise taxes were raised, expecting to regain the losses.
The Public Finance Committee had an inquiry on the tax changes and has urged for observation of the National Authority on Tobacco and Alcohol (NATA) on the taxes.
