Sri Lanka government proposes 479% increase for ICT Ministry while doubling & tripling voice and data taxes

Posted on November 3, 2016  /  0 Comments

There is proof that the government of Sri Lanka pays attention to international benchmarks. When the ITU’s Measuring the Information Society Report showed that Sri Lanka had some of the lowest mobile voice charges in the world (p. 102), the government took prompt action by increasing taxes on voice, SMS and value added services by 80 percent and on data by 160 percent (even though Sri Lanka was not as low as for voice, but the prices were in the low range).

The logical conclusion is that they want the people to decrease use of voice and data caused by these low prices. But they want to use public funds to develop ICT based services, as indicated by the 479 percent increase in the vote of the Ministry of Telecom and Digital Infrastructure. This is a little puzzling. The article excerpted below provides some starting hypotheses.

This is because the Government failed to remove the industry-specific levies amounting to 27.55% for voice and 12.24 for data when decreeing that these services should be subject to VAT and NBT.

In May 2016, we could have made allowance for the hardworking Treasury officials being unaware of the fact that the telecom levy was imposed as a substitute for the previous VAT. But now we have to conclude that they have knowingly imposed VAT on top of sector-specific taxes, to increase the overall tax burden by 80% for voice and 160% for data.

This same Finance Ministry has, in the recently approved Appropriations Bill, increased the allocation for the Ministry of Telecommunication and Digital Infrastructure by up to LKR 2.4 billion (LKR 2,453,610,000) from LKR 423.8 million in 2016. It would be reasonable to assume that this 479 percent increase over the base in 2016 is intended to realize the potential of ICTs.

– See more at:–We-only-pay-Rs–50-tax-for-every-100-in-mobile-charges#sthash.E9bSs9ab.TPUYtes6.dpuf

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