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Mobile tax will offset price subsidy loss

COLOMBO: The Government said the two new taxes that will be imposed on mobile phones and private vehicles will help recover part of the loss incurred by State to stabilise the prices of 12 essential commodities.

The five financial bills which include the proposals to introduce these two taxes will be brought before Parliament today.

The State incurs a total of about Rs.6 billion loss by way of reduced and removed tax to lower the prices of 12 essential commodities like sugar, canned fish, dried chilies, potato and dhal, etc.

“We spend five per cent of our GDP on welfare facilities. How can a Government find funds to spend on these ?,” explaining the reasons for new taxes, Media Minister Mahinda Yapa Abeywardena questioned.

The introduction of these new taxes is essential for the Government to ensure continuity of development projects and to carry on welfare facilities for low income groups while fighting a costly war, he said at the weekly situation briefing at the Information Department yesterday.

The Minister said they expected to raise the current 2.5 per cent tax on mobile phone bills up to 7.5% with the maximum tax imposed on post paid package users. This will add an extra Rs. 75 to a mobile phone bill of Rs. 1,000.

There are 6.4 million mobile phone users in the country. Out of this nearly 5 million are prepaid card users. India and Pakistan have imposed a 8% tax on mobile phones.

The Government also proposes to raise the private vehicle tax from the current 2.5% to 5% on vehicles over 1,600 cc engine capacity. In 2001 the total number of cars registered in Sri Lanka had been 241,400 but in 2007 this has increased to 349,500. The total number of vehicles registered annually had gone up to 2.9 million from 1.7 million from 2001 to 2007.

“This tax will not affect the people who use a modest vehicle less than 1600cc.”

Responding to media queries, Highways Minister Jeyaraj Fernandopulle said Parliament entrusted the Speaker to send the COPE report to the Bribery Commission for action and he should make a statement with regard to what has happened to it.

He said the Government was proud to have been able to produce such a bold report and none other than the President himself proposed MP Wijedasa Rajapakse to Chair this committee.

“Twenty MPs in the COPE are from the parties supporting the State including the JVP, JHU and CWC. There are only 10 MPs from the Opposition,” the Minister said, adding that they have endorsed the report and wanted the Speaker to take it on from here.

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