'VAT only for profit making Supermarkets'

Ishara Mudugamuwa

The Value Added Tax (VAT) of 12.5 percent had been imposed only for supermarkets having a turn over of Rs 500 million for a quarter, Co-operative and Internal Trade Minister Johnston Fernando said.

The minister further said if those supermarkets were selling essential food items, the VAT would not be applied for listed essential food items.

Addressing the media yesterday at his Ministry, Minister Johnston Fernando said the general public should not worry about the VAT, as it was only for large scale profit making supermarkets.

The government expects that these supermarkets would pay this tax from their profits without increasing the prices of goods.

"If supermarkets would increase prices, people would abstain from patronising them, which would be a loss to them. So they would have to reduce prices to keep hold onto their customers," the Minister said.

According to the Consumer Affairs Authority, some VAT exempted goods are potatoes, big onions, mackerel, anchovies, cane sugar, sugar, beet sugar, salmon, herrings, sardines, dried fish, masoor dhal, garlic, cowpea, fresh grapes and apples, crude oil, peas, fresh mandarins, mustard seeds, red onions, green gram, kurakkan, black gram, turmeric, Maldive fish and substitutes, etc.

Issuing a press release, the All Island Retail Sellers' Association convenor, Mohomad Muzamil said, Sri Lanka has only a few supermarket networks and it was questionable as to why the JVP tried to protect this minority.

Prices of goods at retail shops would not increase due to VAT, he said. "In future, supermarkets would have to compete with retail shops by reducing their prices. So this was a progressive or socialist decision taken by the government," he said.