The Hon. Sunil Handunnetti

¶ 01 Thank you for that question, Hon. Leader of the Opposition.

¶ 02 We are within IMF parameters. While staying within those parameters, we recently negotiated support for infant milk powder, yogurt, etc. However, there is no tax law to selectively amend VAT for a single industry. You, an experienced legislator, would know that. If we exempt VAT for one sector, it creates a wrong precedent for others. VAT is value-added tax under the Act. Nonetheless, we are exploring options: the value added up to factory gate on items like the Rs. 207 cost for transporting cane to the factory is very low, yet we must charge VAT on even that. We are considering limiting VAT to the actual value added within the factory. We are also discussing whether VAT paid can be reimbursed from the Treasury; that would be about Rs. 1.3 billion per year. If we reimburse, we must present a revenue plan, since we must meet 15.5% revenue-to-GDP and a 2.5% primary surplus, and raise an additional Rs. 1,000 billion in 2025. Our forthcoming report to the President will outline how we raise offsetting revenue—via exports, tourism, and organic brown sugar—within a new plan.