The Lanka Private Bus Owners’ Association (LPBOA) is demanding an increase in bus fares in the face of the impending Value Added Tax (VAT) rise, given that VAT is applicable to spare parts and lubricants as well as fuel.

LPBOA Chairman Gemunu Wijeratne told The Sunday Morning that the increase in bus fares could not be finalised yet but noted that there definitely had to be an increase in fares.

As stated in Budget 2024, the current VAT rate, set at 15%, is to be increased to 18% from January 2024.

Stressing that the new VAT increase would affect the industry negatively, Wijeratne expressed his concerns, stating that bus owners would not be able to import buses at this rate.

He added that there was a shortage of 4,000 buses in terms of passenger capacity and pointed out that bridging this gap would be next to impossible.

“In the past, we didn’t have a tax imposed on importing standard buses, but there was one for luxury buses. An average bus is imported now at around Rs. 15.7 million. With the increase in VAT, there will be another Rs. 2 million added to the price of just one normal bus next year,” Wijeratne said.

Further, he emphasised on the possibility of a collapse in the bus industry due to these increased rates. 

“Going forward, we are planning to have a discussion with the President about this. Otherwise, there is nothing we can do,” he added.

Meanwhile, when contacted, Transport Ministry Secretary M.M.P.K. Mayadunne said the ministry had sought a clarification from the Treasury on whether the new VAT would be added to diesel and if it would be added to public transport.

“If the VAT applies to public transport, I instructed the National Transport Commission (NTC) and the Sri Lanka Transport Board (SLTB) to evaluate the impact on bus fares,” he said, adding that the fare would not be increased from 1 January. 

“The decision will only be taken following the receipt of clearance from the Treasury,” he said.