Harsha predicts 18 % VAT will have devastating effect on farming

The 18% VAT imposed on agricultural equipment and inputs as well as diesel would have a devastating effect on farming, SJB MP Dr. Harsha de Silva told journalists on Monday.

From 01 January, agricultural machinery and other equipment, including chemical fertiliser previously listed as exempted, would be liable to VAT. Finance Ministry officials had told the Committee on Public Finance (COPF) that dairy products such as liquid milk and eggs would also be subject to VAT, he said.

The MP said that several large scale rice mill owners were encouraging farmers to plant paddy varieties that could be used to produce keeri samba. “The yields of these varieties are 25 percent lower than those of the varieties used to produce samba and nadu, he said.

“We can see the results of this by March 2024,” he said.

MP de Silva said that a future SJB government would not allow a few oligarchs to manipulate key markets. During the Yahapalana government, he had introduced a programme to empower small and medium scale rice mill owners to boost production by giving them interest-free loans and organising them into cooperatives that could compete with large scale rice mills, Dr de Silva said.

The government provided those cooperatives with funds so that they could purchase paddy from the farmers, mill it and resell it to the cooperatives, which sold it to consumers.

“This was called the Shakthi Rice initiative. More than 200 millers and 10,000 farmers were with us. We were able to capture a market share of four percent in the harvest season. But this scheme didn’t go beyond that because Gotabaya Rajapaksa, who came into power the next year, scrapped it. We can only achieve some sort of fairness only if we do something about oligarchs,” he said.

MP de Silva said that in 2022, a family of four could live comfortably with about Rs 90,000, according to the data of the Department of Census and Statistics. Now, it required more than Rs 170,000 to maintain the same standard of living, he said.

“Yes, there are no queues, but the people are much poorer,” he said.

The SJB MP said that Sri Lanka was the only bankrupt Asian country, and it was still in a precarious place.

“India has not gone to the IMF since 1991. We too don’t need to go to the IMF, if we work together according to a well thought-out plan. We need to stop corruption and a plan that links us with international markets,” he said.