The Cabinet of Ministers in Sri Lanka has given the green light to an increase in the Value Added Tax (VAT) rate, raising it to 18% effective from January 1, 2024. This decision, which was announced by Cabinet Spokesman Minister Bandula Gunawardana, marks a significant change in the nation's taxation policy and could potentially impact the tax burden on the public.

The move to increase VAT has sparked discussions among policymakers and the public, as it may have a direct bearing on the cost of living and the overall economic landscape in the country. VAT is a consumption tax applied to the value added at each stage of the production or distribution of goods and services, and any change in this rate can affect the prices of various products and services.

The decision to raise the VAT rate comes amid fiscal considerations and efforts to bolster government revenue. However, it is also raising concerns about the potential financial strain on citizens, especially in a time when economic stability and affordability have been pressing concerns.