Sunday, July 10, 2016

Dilemma Between VAT & CAA Tax On Price Controlled Items

By Sarath Wijesinghe –July 10, 2016

Sarath Wijesinghe

It is learnt that the Cabinet will be deciding next Tuesday that VAT will not be added to essential consumer items, and further items will be declared essential so that the Consumer Affairs Authority will be directing traders a maximum price for the identified items. Currently there are 15 such items declared as essential and the decision will be taken by the Cabinet/Minister to increase or decrease the items based on the needs and challenges of the Consumer which gives a broader meaning in Sri Lankan context compared to the definition worldwide. (Section 74- of the Act- Any actual or potential user of any goods or services made available for consideration by any trader or manufacturer) This is a matter that should have taken by the Governance at the introduction of the VAT fiasco to ease the burden to the consumer. Now even the implementation of the budget proposals on Vat is not finalized as the draft bill is to be presented to the Parliament to give legal states. It is tactically a mistake to increase VAT without amending the Tax structure with the approval from the Parliament. This indicates how disorganized the implementation process and the future strategy of both line Ministries concerned namely Finance and Consumer Affairs which comes under Industries. Cabinet may decide but the procedure in declaring the items essential is long cumbersome and complicated procedure subject to litigation. Activist groups are planning to seek redress on VAT fiasco with the Parliamentary process and procedures. It is time for the Finance and Minister of Industries (and Consumer Affairs) to work together with a common plan and strategy to avert the unrest and agitations of the consumer by smooth and careful implementation of the Vat and CAA systems with one voice/word. Concept and procedure of price control under Consumer Practitioner Act, and Control of prices act is replaced by the Consumer Affairs Authority Act which empowers regulation of prices under normal circumstances and special procedure on identified essential items if and when the line Minister declares the item or items essential. This follows that the price control and maintaining standards will be implemented by regulatory process under Section nine to Section thirty three of the Consumer Affairs Act, which deals with issue of directions, determining standards, Inquire into complaints, enter into agreements, acts against refusal to sell and many other regulatory powers not looked into and implemented by the CAA to ease the burden of the Consumer and the Governance.