Ranawaka warns of 11% hike in fuel prices with revised VAT from January

By Rathindra Kuruwita

The import costs of petrol, diesel and coal will rise by around 11 percent from 01 January 2014, when the VAT increases to 18 percent, former Minister and leader of the United Republican Front (URF) Patali Champika Ranawaka said.

He added that previously petrol, diesel and coal were exempted from VAT.

“They had a Ports and Airports Development Levy (PAL) of 7.5 percent before. Now there will be an 18 percent VAT on these products. Soon, there will be an additional cost of about 11 percent when new fuel stocks are imported from next year. Then fuel prices will surely go up,” he said.

Ranawaka said that Sri Lanka also generates a large percentage of electricity by burning coal and fossil fuels. The cost of generation will also rise due to the imposition of VAT.

“The government claims that they increased VAT because of the IMF. However, the government is only interested in taxing professionals and increasing indirect taxes. Both will have negative overall impacts,” he said.