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Editorial

Income tax

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It is very clear at present that the new income tax net cast by the Ranil Wickremesinghe government has provoked a situation that may well become unmanageable and ominous signs of this are clearly emerging. Strident protests from groups including doctors, university academics and others including port and airport employees and many others have been becoming increasingly strident over the past several days. Hints of direct trade union action, obviously meaning strikes, have been made. Whether a government, already on the back foot following Inter University Students’ Federation (IUSF) Convenor Vasantha Mudalige’s release on bail and angry public opinion railing against blatant efforts to postpone the scheduled local elections. can fend off the tax protests remains to be seen.

All those protesting on this account well know that the government is desperately cash strapped and needs to urgently harness revenue to keep the wheels of state turning. On its part, the government also is too well aware of the inability of most of the protesters to bear the new income tax burden in the face of galloping inflation, particularly food, electricity and a host of other goods and services are concerned. But there is very little that it can do about it. Wickremesinghe’s and his government’s obdurate refusal to abandon or cut down on Saturday’s 75th Independence anniversary bash, said to have cost Rs. 200 million, has only aggravated public fury about the new income tax burden placed upon the people.

The very small number of personal income tax payers in this country have always felt unfairly treated, believing they have been singled out for harsh treatment while the vast majority remained untouched. They could not be more wrong. All the people of the country pay taxes and how! As one famous newspaper editor of the past pungently put it, “every time you strike a match or flush the toilet, you are paying a tax.” We all know the platitude that the only thing that is certain in life is death and taxes. Indirect taxes unlike those that are direct (like income tax) by far account for the lion’s share of tax revenue. Populations of developed countries, particularly in Europe and North America, pay high income taxes. But they, unlike us in Sri Lanka, get good returns for what they pay. We, in this land like no other, can only grin cynically when we see signs proclaiming “Your tax rupees at work” at road digs and construction sites and think “like hell” to ourselves.

Equity is a basic principle of taxation long ignored in this country. Go back to 1977 and the early years of opening our long shackled economy by the J.R. Jayewardene government with Ronnie de Mel as finance minister. That was when public service emoluments were freed of income tax on the argument that top public servants were paid much less than their private sector counterparts and this hindered government’s ability to hold competent managers in the public sector hierarchy. The contention was not altogether without merit but there were many fallacies as well. Public servants from the colonial days have enjoyed non-contributory pensions which is not the case (with very few exceptions) in the private sector. Dr. N.M. Perera, as finance minister in Mrs. Bandaranaike’s United Front government of 1970 tried, without success, to withdraw the pension benefits from new entrants to the public service. He sensibly proposed that they be paid a retirement benefit like what is offered by the EPF to private sector employees with contributions from both employer and employee. The failure of this effort has left a ticking time bomb on the taxpayer’s lap to this day.

At a post-budget press conference following freeing public sector salaries from income tax, then Finance Minister De Mel was asked whether parliamentary emoluments too would be similarly exempted. He ducked the question saying “that hasn’t been decided yet.” Of course the benefit was extended to MPs too. Cabinet Spokesman Bandula Gunawardene told a post-cabinet news briefing a few days ago said that the IMF wanted all those earning Rs. 45,000 a month to be made liable to income tax. The government tried its best to push it to a monthly Rs. 150,000 and finally settled at Rs. 100,000. There were those who didn’t believe the minister on the premise that an institution like the IMF would not have got into micro details but would have broadly prescribed a percentage of GDP that must be gathered as tax revenue. However it wasn’t long before the president himself confirmed Gunawardene’s claim.

There’s no avoiding the reality that Sri Lanka’s income tax base is far too narrow and needs to be widened substantially. This would mean that people who have never paid income tax would caught up in the tax net and would deeply resent being compelled to pay. This is particularly so in the context of the value of money reducing sharply, most so in recent months. The country is also saddled with an Inland Revenue Department entrenched in a tradition of harassing already squeezed lemons to increase tax collection in a society where evasion is widely prevalent, often among professionals who should know better. The government must also be cognizant of the untaxed, lavish non-cash benefits of politicians deeply resented by the people. However that be, whether the government will be allowed to implement the announced scheme or be compelled to backpedal remains to be seen.



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Editorial

Strange bedfellows, ‘comrades’, and polls

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Friday 29th May, 2026

How long the Provincial Councils (PCs) will remain unelected is anybody’s guess. All of them are currently under the provincial Governors appointed by the President. There have been five Presidents and four governments since the conclusion of the last PC elections held on a staggered basis between 2012 and 2014. The JVP-NPP government is under increasing pressure to hold the much-delayed PC polls. The NPP’s National Policy Framework, A Thriving Nation: A Beautiful Life, promises to hold the PC elections within one year of forming a government. But the government is now wary of holding elections because its performance at last year’s local LG polls fell below its expectations just seven months after its spectacular win at the 2024 general election.

The Opposition has sought to capitalise on what is described as the government’s fear of elections. It is cranking up pressure on the JVP/NPP to stop trotting out lame excuses and hold the PC elections.

JVP General Secretary Tilvin Silva caused quite a stir the other day by declaring that funds allocated by Budget 2026 for the PC elections had been spent on disaster relief and therefore PC elections could not be held this year. The Opposition and Election monitors lashed out at the government for its efforts to postpone the PC polls on some flimsy pretext. The NPP politicians have since claimed there are funds for elections but stopped short of specifying when the PC polls will be held.

Now, the Election Commission says it is ready to conduct the PC polls soon if Parliament passes a law, enabling it to do so under the PR system instead of the Mixed Proportional system. The Treasury says it is ready to release funds. The Opposition says it is ready to face an election, but the JVP/NPP is not ready. It is unbecoming of a government that flaunts its two-thirds majority in Parliament to postpone elections.

Ironically, the Opposition political parties that castigate the JVP-NPP government for delaying the PC polls helped the UNP-led Yahapalana government amend the Provincial Council Elections Act in a deplorable manner and postpone the PC polls indefinitely. The JVP fully backed the Yahapalana administration, which avoided an election in 2017 for fear of suffering a midterm electoral defeat.

At a Joint Opposition media briefing on Wednesday, the UNP proposed that all Opposition parties close ranks and form a common electoral front to defeat the government in the next PC polls. That strategy has worked in the cooperative society elections, where the Opposition turned the tables on the government in many areas. Those contests serve as electoral weather vanes, indicating the direction of political winds. Opposition parties have gained control of many cooperative societies by preventing a split in the anti-government vote. That is no mean achievement for the Opposition.

However, the dynamics of contests and voting patterns do not remain constant at different elections, and therefore the question is how advisable it is to extrapolate a trend from the cooperative society elections and political alignments related to them.

The difficulty of bringing Opposition parties under one banner became evident on Wednesday itself. The SJB and the SLPP were not represented at the Opposition media briefing, according to press reports. It may be too early to say whether they, too, will join the grand Opposition alliance in the offing, but bringing a diverse group of politicians together to contest elections is a Herculean task.

Electoral alliances, formed by strange bedfellows with competing ambitions and espousing different ideologies are fissiparous and fragile. They tend to collapse even after being elected to power, plunging political institutions into chaos. History is full of such instances. The fate that befell the so-called National Unity government, or the Yahapalana administration, as it was popularly known, is a case in point. Three years into office, the uneasy alliance between the UNP and the SLFP collapsed, rendering that government dysfunctional to the extent of endangering national security. It is hoped that the government will muster the courage to hold the PC polls before long and that no councils will end up hung.

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Editorial

Futility of rhetoric and need for unity

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Thursday 28th May, 2026

The JVP-NPP government would have the public believe that the economy is resilient enough to absorb external shocks, and the rupee is stabilising. True, the rupee has staged a countertrend rally recently, but the situation is far from rosy. Anything is possible in this topsy-turvy world, with US President Donald Trump acting whimsically. Much more therefore needs to be done to strengthen the rupee. This requires a truly national effort. Sadly, the government and the Opposition are at daggers drawn, and do not see eye to eye even on crucial economic issues.

Opposition politicians parade their supposed knowledge of economic affairs in Parliament, which is full of backseat drivers who claim to know the way but cannot drive. They keep on telling the public what they think is wrong with the economy. There is absolutely no need for them to do so, for the country’s economic problems and their root causes are all too well known. What the public wants to know is how the Opposition proposes to solve them.

Interestingly, the SLPP, which mismanaged the economy and bankrupted the country, is also critical of the incumbent government’s economic performance. Its leaders are lecturing the government on how to run the economy. What it is doing is like a bankrupt businessman conducting lectures on business management.

While out of power, the JVP/NPP also lectured previous governments on how to manage the economy. Its leaders would even brag that raising funds to settle the country’s external debt was child’s play, but now they are struggling to increase the forex inflow and navigate a host of other economic issues. Some of them even claimed they would be able to build the country’s foreign currency reserves by asking their supporters residing overseas to send in dollars. Between saying and doing, many a pair of shoes is said to be worn out.

The JVP was prominent among the political parties that resisted President Ranil Wickremesinghe’s modus operandi to put the economy back on an even keel during the previous government. It also berated the IMF and pledged to renegotiate the ongoing bailout programme if voted into power. It opposed tax and tariff increases and demanded that relief be granted to the public even at the expense of the economic recovery measures. It insulted Wickremesinghe, claiming that he was too old to rule the country and derisively called him Seeya (grandpa). Today, in a strange twist of fate, the JVP-led NPP government has chosen to pursue Wickremesinghe’s economic policies (‘Seeyanomics’?). It is jacking up taxes and tariffs and curtailing state expenditure in a desperate bid to boost revenue.

President Wickremesinghe got his act together on the economic front, and made tough decisions, regardless of their political consequences, and straightened up the economy, but he could not win the last presidential election because he succumbed to the arrogance of power and blundered on the political front, shielding as he did crooks of all sorts. Other political leaders, especially President Anura Kumara Dissanayake should learn from Wickremesinghe’s experience.

The Opposition’s right to criticise the government and its policies, economic or otherwise, cannot be questioned. It must act as a countervailing force against the party in power, but it should stop playing politics with the economy and allow the government to do what needs to be done to shore up the country’s foreign currency reserves and strengthen the rupee.

A strategy to mitigate the adverse impact of external pressures on the country’s foreign currency reserves consists in curtailing the foreign exchange outflow. The need for import restrictions, etc., cannot be overstated. Governments usually fight shy of adopting such drastic yet essential measures, fearing political consequences and protests by their political rivals. Procrastination worsens crises. This is why a consensual approach is needed to resolve existential issues facing the nation.

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Editorial

Flaws in laws

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Wednesday 27th May, 2026

The Parliamentary Select Committee (PSC) on Reviewing Election Laws, which recently had its first meeting under the chairmanship of the Minister of Public Administration, Provincial Councils and Local Government, Prof. A. H. M. H. Abayarathna, has reportedly decided to seek public views on the election law review process. Reviewing election laws as well as modernising them to reflect present-day needs is a long-felt need. The PSC deserves the fullest public cooperation.

The PSC has been tasked with reviewing election laws, including the Registration of Electors Act, the Local Authorities Elections Ordinance, the Parliamentary Elections Act, the Presidential Elections Act, as well as amendments to those laws over the years and special legislative provisions relevant to their implementation. It will also evaluate the need to revise, amend and consolidate the laws and to recommend necessary reforms and amendments to the current legal framework governing elections. It has the authority to summon any individual, order the submission of any document or report and obtain evidence either in writing or orally.

Much is being spoken these days about law’s delays and ongoing efforts to clear a massive backlog of court cases. Of equal concern are the flaws in laws, and complaints abound that they even stand in the way of effective enforcement. There is a need for a wider public discussion on these issues. However, the focus of this comment is on some glaring deficiencies in election laws and how they have adversely impacted people’s franchise, a fundamental component of representative democracy.

An unauthorised change effected to election laws has had a corrosive effect on the Constitution itself. It has enabled the political parties and their leaders to circumvent the Constitution and abuse the National List (NL) mechanism to catapult persons of their choice to Parliament. There is hardly any political party that has not benefited from it.

Article 99A of the Constitution allows the persons whose names are included in the lists submitted to the Commissioner of Elections or in any nomination paper submitted in respect of any electoral district by political parties or independent groups at elections to be appointed to Parliament via the NL. This provision led to the sordid practice of many defeated candidates entering Parliament. One may recall that UNP leader Ranil Wickremesinghe, who failed to secure enough votes at the 2020 general election to represent the people of Colombo, entered Parliament via the NL, became President and exercised control over all three tiers of government, Parliament, the provincial councils and the local government authorities. True, he was instrumental in managing the worst-ever economic crisis, and the country gained from his NL appointment, which however is the exception that proves the rule. Even incompetent persons can enter Parliament via the NL.

A UNP government did something even worse in 1988, when a general election was held under the Proportional Representation (PR) system for the first time in this country. It introduced Section 64(5) of the Parliament Elections Act, inter alia, as an urgent Bill, severely eroding the essence of the constitutional provisions pertaining to the NL and people’s franchise. Parliament Elections Act, No 1 of 1981, as amended in 1988, allows ‘any member’ of a political party to be appointed to fill an NL vacancy. This section has enabled political parties to make NL appointments, as stipulated by the Constitution, and then engineer vacancies and bring in persons of their choice as NL MPs. It is now a fait accompli because there is no legal provision for post-enactment judicial review of legislation. Worse, it has been alleged that the words, “any person” were inserted after the ratification of the amendment Bill.

It is hoped that the PSC, tasked with reviewing election laws, will care to ensure that the Parliamentary Elections Act is rid of the questionable section that adversely impacts franchise and even undermines the Constitution.

There is also a need to overhaul the Provincial Council Elections (Amendment) Act, which was stuffed with unauthorised sections at the committee stage in 2017 to pave the way for the indefinite postponement of the Provincial Council elections. What Parliament passed was a textbook Christmas Tree Bill.

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