The Hon. Padmasiri Bandara

¶ 01 Hon. Presiding Member, since this morning both Opposition and Government Members have expressed views on the Bill to amend the Value Added Tax Act, No. 14 of 2002. Various arguments have been discussed. In criticizing and giving views on this Amendment, we observed the Opposition repeatedly attempting to cite the current situation to cover up past mistakes. They try to bring up U.S. tax policy turmoil across the world these days to bury our own history.

¶ 02 When implementing our tax laws, we considered specific factors. This tax law is not new. Throughout history, everyone in this country has paid taxes — from the poorest to the richest — in various forms, some direct, some indirect. At the same time, people with income have evaded taxes, hidden values in their institutions, manipulated accounts, and defrauded taxes. The Opposition has a long history here: billionaires escaping taxes while ordinary people pay. Therefore, we decided since January 2025, with our new Budget, to amend tax laws to give relief to the general public, and also to collect taxes from those who have not paid thus far through this Amendment process.

¶ 03 We brought this VAT (Amendment) Bill on two main grounds. First, to correct past errors. What are those? In our garment factories and small rural industries, the workforce is largely young, innocent rural youth. I have personally visited many factories during my time in the National Trade Union Centre. Because of the way taxes were structured, facilities such as meals and transport that employers used to provide were curtailed when the previous government taxed free meals and transport. Employers passed that tax by eliminating those facilities. The burden fell not on big magnates, but on the innocent rural worker. We have therefore decided to end that tax and present measures to allow such worker welfare again.

¶ 04 We also know large warehouse owners and big corporates evaded billions in taxes. Under our Government we have already collected thousands of crores of rupees in arrears. Going forward, we will focus not on squeezing small businesses but on ensuring the wealthy pay. We also saw the malpractice of commissions in insurance; we are removing the insurance-related tax that distorted this. If these industries collapse, it is not the elite who suffer; it is the poorest villagers who lose their jobs. Through this VAT Amendment to the 2002 Act, we aim to address these.

¶ 05 Regarding removal of VAT on milk and yoghurt: the Opposition trivializes it. But for poor families, after a hard day’s work, a glass of milk or a yoghurt matters. Granting VAT relief on these shows we care for the poor. Our purpose is not to protect the upper class but to lift up the suffering.

¶ 06 We also understand how tax evasion occurs via paper transactions. When two parties transact in cash, leakages arise. Therefore, within our policy we have advanced digitalization beyond two-party cash dealings. The President stated in the Budget Speech that by 2027-2028, we will phase out cash transactions, because digitalization curbs fraud, corruption and theft. Under our tax policy we are advancing digitalization so that the tax burden is shifted correctly to those at the top who should pay, not regressive levies on the poorest. With that message, I conclude. Thank you.