President says the Government aims to cut VAT within two to three years

President Anura Kumara Dissanayake said on Thursday that the Government intends to reduce Value Added Tax within the next two to three years, the first time he has attached a timeframe and a named tax to the relief he has been promising since September.

He was speaking at Temple Trees, where appointment letters were presented to 1,540 newly recruited Grama Niladhari officers.

“Our aim is to reduce Value Added Tax (VAT) and provide relief to the people within the next two to three years,” the President said, according to Hiru News.

He framed it as a balancing act: easing the tax burden on the public while managing state expenditure that is rising.

Taxes on books

The President also pressed for the removal of taxes on essential educational materials, books in particular, saying a child should not have to carry a tax burden when buying a book for their education.

He did not say through which instrument that would be done, or when.

What the relief has to be paid for

The constraint he named is the public sector pay settlement. The decision to raise basic salaries of public servants in three phases will require an additional Rs. 330 billion by 2027, the President said — a commitment that has to be absorbed alongside any tax reduction.

The Daily Mirror reports that he said these obligations would have to be weighed in preparing the next national Budget, due to be presented on 12 November. The Appropriation Bill for 2027 had its first reading in Parliament on Tuesday.

Context

The statement sharpens an earlier one. At a rally in Akuressa on 20 September the President said certain taxes would be removed through the 2027 Budget but named no tax, no rate and no date. Thursday’s remarks supply the tax and a horizon, though still no rate.

Not reported: neither filing gives the VAT rate the Government is working towards, nor a starting date within the two-to-three-year window. Neither says how a VAT reduction would be reconciled with the revenue commitments under the IMF programme, and no Treasury or Finance Ministry costing of the proposal is quoted.