Wednesday, July 13, 2016

Supreme Court ruling on VAT – another reason for lack of business confidence!

Wherever I go, businessmen complain that they don’t know how to cope with an ever changing taxation environment, that from last November’s budget, changes seem to occur on a regular basis, that makes planning for the future extremely difficult. Worse with backdated taxes, no one knows where they stand, Govt. policy is viewed as being schizophrenic at best.

In light of this, with throwaway words, when VAT was exempted on Health Services, would be replaced with VAT on cigarettes by 15% on an already high taxed item, meant that greedy traders wished to cash in on this also, to take personal advantage, where both the Govt. lose the additional tax revenue, and the consumer is fleeced further so that the TRADDER/HOARDER benefits!

See link for how the traders are even putting their motor vehicles as collateral to take loans to fill up on Cigarettes, so that when the 15% is imposed, they will benefit by NOT having paid the higher cost price, but able to get the higher revenue from the 6 rupee per cigarette additional tax.

This kind of unconscionable greed is indicative of the psyche of our traders, and this time, I believe the Govt. should call their bluff by doing nothing.

The Govt. already raises Rs110B every year from tobacco taxes, despite it being a discretionary spend, addicts, the generally poor, and psychologically dependent people are further inconvenienced by the state.

A lesson in this if ever there is one, is that the Finance Minister, MUST work on his next budget NOW, and have it discussed with the relevant people, and only announce the changes, once all discussions receive a level of concurrence that DOES NOT lead to later withdrawals and removals, that have dented this Government’s credibility lately.

I saw many Govt. ministers explained this away by saying that the Supreme Court is NOW Independent and therefore cannot be influenced, by Govt. and only on the legal justifications for actions they have decided to take. Simply put that is the price for YAHAPALANAYA. I simply don’t buy it at all. Competent people must dot the is and cross the ts so that we DO NOT have a recurrence of this laughable ineptitude and incompetence of the Govt.

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