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VAT rise means you will pay more for utility bills
Utility bills including charges of electricity, water and telephone are set to rise with the revision of the Value Added taxes (VAT).
These are among a host of other utility charges which will be increased in terms of a Budget 2016 proposal to increase VAT from 11 percent to 12.5 percent, a senior Inland Revenue Department official explained.
However, the increase in VAT will not apply to certain wholesale and retail trade because the Government wants to stabilise food prices. The Budget proposals did not increase the direct taxes on telephone, water or electricity charges. The Government also has proposed that the minimum threshold for the liability for VAT should be reduced to Rs. 12 million a year from Rs. 15 million, to increase the number of people paying VAT.
In addition to an increased VAT, consumers are also set to feel the impact of an increased Nation Building Tax (NBT) which is imposed on business establishments and service organisations, but invariably passed on to customers, the officials explained.
It was proposed in Friday’s Budget that the NBT which stood at two percent be increased to four percent.
The government hopes to raise Rs. 90 billion from the Nation Building Tax making it one of the biggest revenue gainers.