‘VAT will drive prices of fuel, electricty up’

By Rathindra Kuruwita

The petroleum sector unions warn that fuel prices will rise by around 11 percent from 01 January 2014 due to 18% VAT.

Dr. Ashoka Ranwala, President of the General Employees’ Union of Petroleum Corporation, said previously petrol, diesel and coal had been exempted from VAT.

The prices of petroleum products affected those of other products and services and therefore successive governments had exempted fuel from VAT.

“These products were subjected to the 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 10.5 percent when fuel is imported from next year. Then fuel prices will surely go up,” he said.

Meanwhile, former Minister and leader of the United Republican Front (URF) Patali Champika Ranawaka told The Island that Sri Lanka was dependent on thermal power generation and the cost of electricity would also increase due to VAT on fuel.

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