The Hon. Kathiravelu Shanmugam Kugathasan

¶ 01 Hon. Deputy Speaker, I wish to address the Orders under the Stamp Duty (Special Provisions) Act, the Ports and Airports Development Levy Act, the Excise (Special Provisions) Act, and the Value Added Tax Act.

¶ 02 First, the Order under Section 5 of the Stamp Duty (Special Provisions) Act exempts from stamp duty the payments made by the Government to those affected by natural disasters. By removing stamp duty on relief grants, rental assistance and livelihood compensation, the Government ensures that these funds reach affected families without tax friction.

¶ 03 Second, the Order under Section 3(3) of the Ports and Airports Development Levy Act introduces a five per cent levy on certain low-diameter plastic water supply pipes and fittings for household use.

¶ 04 Third, the Order under Section 3 of the Excise (Special Provisions) Act (Gazette Extraordinary No. 2476/06 of 03 March 2026) imposes a 25 per cent excise levy on household-use washing machines and other consumer durables, extending the special excise net beyond traditional items such as petroleum products, tobacco and alcohol, to raise revenue from middle-class consumption.

¶ 05 Fourth, the Order under the VAT Act repeals Gazette No. 2095/20 of 01 November 2018 that exempted certain textile imports, and applies a uniform 18 per cent VAT to both imports and domestic supplies.

¶ 06 Concerns arise on three fronts: - Cash-flow strain on apparel exporters due to charging 18 per cent VAT at import on textiles in a context where Sri Lanka relies heavily on imported fabric because of a limited domestic textile base. While input VAT is creditable, pre-financing VAT impacts working capital. - The shift from import-linked para-tariffs to broader consumption taxes like VAT and excise increases the burden on low- and middle-income households. - Lowering the VAT registration threshold from Rs. 60 million to Rs. 36 million brings thousands of SMEs into the VAT net during a weak economy, risking reform fatigue among the public.

¶ 07 Recommendations: - Implement expedited VAT refunds for apparel exporters to mitigate working capital pressure. - Prioritize direct taxation and reduce consumption taxes on essential household items to protect consumers.

¶ 08 Sri Lanka’s tax measures must balance revenue needs, competition, and social equity. As Tiruvalluvar advised two millennia ago: even soft peacock feathers, if overloaded on a cart, will break its axle; likewise, overburdening taxpayers can break the polity. Thank you.