Sri Lankan Opposition Protests VAT Hike, Donning Black

COLOMBO (News 1st); Sri Lankan opposition lawmakers from the Samagi Jana Balawegaya (SJB) staged a protest in parliament on Tuesday (9), wearing black to denounce the recent hike in value-added tax (VAT) and the rising cost of living.

The SJB MPs, led by party leader Sajith Premadasa, have in recent days accused the government of being insensitive to the plight of the ordinary people.

The recent hike in Value-Added Tax (VAT) in Sri Lanka's 2024 budget has sparked concerns about its impact on essential goods, particularly on certain essentials. 

With an increase from 15% to 18% on specific products and services, and the reintroduction of VAT on previously untaxed items, anxieties are mounting over rising costs for families already struggling with an economic downturn.

In early January 2024, Sri Lankan President Ranil Wickremesinghe defended the government's decision to raise the Value Added Tax (VAT) from 15% to 18%, citing the nation's dire economic situation and the need for fiscal consolidation. 

The government's decision stems from a crucial agreement reached with the International Monetary Fund (IMF). As President Wickremesinghe stated, the agreement restricts the government from resorting to bank loans and printing money, previously relied upon to finance its operations. This necessitated alternative revenue-generating measures.

To bolster the government's income, the administration aims to achieve a revenue equivalent to 12% of GDP this year, with an ultimate target of 15%. With the restriction on traditional borrowing mechanisms, the VAT hike emerged as the primary avenue to achieve this goal.