Nightmare unfolding

A new year has dawned, and a nightmare is unfolding for the public. It is a case of the people’s worst fears being realised. The implementation of the enhanced VAT (Value Added Tax) regime has had the same effect as a dam burst, in a manner of speaking. People are struggling to keep their heads above water. Traders have jacked up prices according to their whims and fancies. They are guided by Rafferty’s rules, as usual. Regulators seem fast asleep maybe due to the end-of-year hangover, or they do not give a tinker’s cuss about the exploitation of the hapless consumers.

It is being argued in some quarters that the government has increased VAT against its will, in this election year, because it was under pressure from the IMF to do so. But what the IMF asked the government to do was to increase state revenue––a goal that could have been achieved by other means. The current dispensation should have curtailed its wasteful expenditure and taken action to eliminate corruption, which deprives the state coffers of billions of rupees a year, besides standing in the way of foreign investment. A rupee saved is said to be a rupee earned. The government has allocated more than Rs. 11 billion purportedly for development work at the district level in view of elections, and the Opposition says only the ruling party MPs will benefit from the fund allocation at issue. This, the government has done, while claiming to be unable to allocate about Rs. 10 billion for conducting the local government elections! The ruling party politicians’ foreign junkets must also be costing Citizen Perera an arm and a leg. Most of all, the government has not made any serious effort to create a sustainable and equitable tax system by expanding the personal tax base, among other things; it has resorted to jacking up PAYE tax and VAT, instead.

There is reason to believe that the government has dared increase VAT in an election year because it thinks its leaders can take voters for a ride once again by wrapping themselves in the flag and bellowing ethnocentric rhetoric.

Private bus operators began their campaign for a fare hike weeks ago. Now that the government has increased VAT, let it be urged to do the math at least where the bus fares are concerned, and foil the private bus operators’ attempt to effect a massive fare hike on the basis of the increase in the price of diesel due to the VAT hike.

It may be recalled that the private bus operators audaciously refused to bring down fares despite a 27-rupee decrease in the price of diesel on 30 Nov., 2023. We pointed out the absurdity of their position in an editorial comment on 05 December 2023. We argued that if the bus operators considered a 27-rupee price decrease insufficient for them to consider a fare reduction, it logically followed from their contention that they would not have asked for an upward fare revision if the diesel price had been increased by Rs. 27 from Rs. 356 (being the price as at 30 Nov.) to Rs. 383. Therefore, we pointed out that a fare hike must not be granted even if the diesel price reached Rs. 383 in the future. The latest VAT increase has caused the price of regular diesel (which was Rs. 329 at 31 Dec., 2023) to increase by Rs. 29 to Rs. 358, which is only two rupees higher than the diesel price (Rs. 356) on 30 Nov., when the bus operators refused to decrease fares. If the VAT hike has led to any increases in spares, etc., that issue has to be handled separately. The bus mudalalis must not be allowed to have the best of both worlds where fuel price fluctuations are concerned. But, unfortunately, given the government politicians’ enormous appetite for bungs, bus operators and other such elements bent on fleecing the public usually have the last laugh.

The incumbent SLPP-UNP regime has earned several epithets, most of which are not so complimentary. But in our book, nothing suits it more than ‘VAT 69’. Obviously, not that it has enabled the people to lead the so-called whiskey lifestyle; it can be called as such because it depends solely on VAT (Value Added Tax) for survival, having come to power by duping 69 lakh voters.