The Hon. Ravi Karunanayake

¶ 01 Thank you, Hon. Deputy Chair. It is 3.07 p.m.; my 17 minutes begin now.

¶ 02 We discuss an important Bill. Referring to two points from Hon. Wijesiri Basnayake’s speech: first, let us stop the “76‑year curse” rhetoric—there is a new Government now. He cited tax‑to‑GDP: in 2014 it was 8.2%; when I became Finance Minister, it rose to 12% in 2015, 13.5% in 2016, 14.8% in 2017, and 14.9% in 2019. When the current administration took over in 2022, amid bankruptcy, it was 8.2%. After President Ranil Wickremesinghe’s measures, it rose to 11% in 2023 and 13.9% in 2024. The Member says it will be 14% in 2025. Rather than boast about projections, acknowledge what was done. Let us end petty politics and build the country.

¶ 03 On VAT: it was introduced in 2002 under the UNP (Minister Choksy). In 2015, I engaged with the IMF and reformed VAT substantially; many of those reforms are praised today. You say VAT on yoghurt and milk was reduced—good; it shows you can reduce VAT. Then why not fix eggs? In January 2024, a 15% VAT hit egg producers; remove it if it added Rs. 15 per egg as we discussed at COPF.

¶ 04 On the VAT threshold: if we lower the threshold, living costs rise because more informal operators charge VAT. In our time, we raised it to Rs. 20 million to formalize without overburdening micro traders; the Gotabaya administration reversed it, contributing to today’s mess. I urge restoring the Rs. 20 million threshold—bringing more proper recording via the formal sector and improving revenue without distortion.

¶ 05 Point‑of‑sale (POS) systems: we initiated this in 2015 with funding; implementation stalled later. If we deploy POS across about 65,000 businesses and digitize VAT collection, tax revenue could rise by roughly 75%. Please implement it.

¶ 06 On SVAT: exporters are already under stress; do not add cash‑flow burdens. Only implement a superior system that matches inputs and outputs automatically and settles in real time. Cost of capital is about 18%; adding long refund lags is destructive. Also consider deemed exporters—transport, IT, and others—who support exports. If you tax all deemed exporters now, the 18% burden ultimately falls on core exporters, eroding competitiveness. That is why we kept deemed exporters under SVAT. Maintain that until a fully functional live system is ready.

¶ 07 On policy consistency: the Minister said parate execution was suspended; then last evening a release extended relief—till June for large firms and till September for SMEs. Please ensure consistency.

¶ 08 SMEs once paid about 11% interest; after the Central Bank’s announcement of bankruptcy, rates spiked to 31%. Was that the SMEs’ fault or the Central Bank’s? Big chairs make the statements; SMEs pay the price—losing not only businesses but homes. Provide real relief.

¶ 09 To attract investment, Ministers must speak candidly and consistently. The Opposition is not protesting or striking; the environment is calm—use it to bring investors. IMF endorsement is needed post‑bankruptcy, but do not simply “dance” to outsiders. Our own professionals can design better systems—give them room. Do not leave the war only to soldiers; generals must take command.