VAT implementation from January 1, 2024, threatens children’s nutrition and agriculture, warns SJB MP and COPF Chairman

By Saman Indrajith

Dr. Harsha de Silva, Samagi Jana Balawegaya (SJB) MP and Chairman of the Committee on Public Finance (COPF), speaking in Parliament yesterday, expressed concern over the impending VAT application and its potential negative impact.

Dr. de Silva revealed that the COPF had urged the Ministry of Finance to reconsider taxing high-protein foods tailored for children, particularly those produced using local grains and agricultural inputs. He emphasised the adverse effect such taxation could have on children’s nutrition and the agricultural sectors.

“In response, they assured us of reviewing this matter. With rising child malnutrition, it’s perplexing why we would tax high-protein foods targeted at children. This move will also impact farmers, taxing their equipment, and fertiliser, starting January 1. Additionally, diesel tax will escalate on the same day. COPF has urged the Ministry to reconsider these aspects, too,” he stated.

Dr. de Silva also highlighted the imposition of an 18% VAT on medical equipment by the government.

“The Ministry claims the tax affects only equipment in private hospitals, stating that state hospitals are covered entirely by the government. However, it’s widely known that private hospitals cater to people from all social strata. Most state hospitals no longer conduct medical tests, instead redirecting patients to the private sector. Consequently, the costs of these tests will surge significantly,” he added.

Further, he expressed concern over the taxation of ambulances and advocated for VAT exemptions on medical, agricultural, and children’s nutrition-related goods.

Echoing this sentiment, Lakshman Kirielle, SJM MP and Chief Opposition Whip, highlighted the VAT’s substantial impact on the cost of living. He underscored a 15% drop in exports in October and criticised increased taxation as an inadequate solution to the balance of payments crisis.

“Without a concrete strategy to bolster exports, the government’s approach seems punitive,” Kirielle remarked.