President signals VAT cuts and calls for tax relief on books

By The Pulseline News Desk

President Anura Kumara Dissanayake has signalled plans to reduce Value Added Tax (VAT) rates over the next two to three years and remove taxes on books, while acknowledging that tax relief will depend on the Government’s ability to manage rising public expenditure.

Speaking at a ceremony to present appointment letters to 1,540 newly recruited Grama Niladhari officers at Temple Trees, the President said the Government’s objective was to ease the tax burden on the public while balancing its financial commitments.

“Our objective is to provide relief to the people by reducing Value Added Tax (VAT) rates over the next two to three years,” he said.

The President also highlighted the need to reconsider taxes on educational materials, arguing that children should not face additional costs when purchasing books for reading and learning.

“If a child has to pay a tax when purchasing a book to read, we should remove that tax,” he said.

However, the proposed tax reductions come amid increasing demands on public finances, including the Government’s commitment to raise public sector salaries.

President Dissanayake said the three-stage increase in basic salaries for public sector employees would add approximately Rs. 330 billion to Government expenditure by 2027.

He said these commitments would have to be taken into account when preparing the next national Budget, scheduled to be presented in Parliament on November 12.

The President also pointed out that public sector salaries were financed through taxes collected from citizens, underscoring the need to balance improved incomes for Government employees with efforts to reduce the financial burden on taxpayers.

The proposed VAT reductions and removal of taxes on books would therefore need to be considered alongside the Government’s expenditure obligations and revenue requirements.

While the President outlined the Government’s intention to provide tax relief over the next two to three years, he did not specify the proposed revised VAT rates, the timeline for individual reductions or the precise tax changes envisaged for books.

The Budget to be presented next month is expected to provide a clearer indication of the Government’s fiscal priorities and how it intends to reconcile tax relief with rising public expenditure.