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Editorial

Booze, hooch and taxes

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Writing his chairman’s review in the latest annual report of the Distilleries Company of Sri Lanka PLC (DCSL), the country’s biggest liquor manufacturer, Mr. Harry Jayawardena warned that pure coconut arrack may soon be history. This prediction was based on the price of this super-taxed product, which has made it totally unaffordable to the consumer. Obviously Jayawardena is talking from the perspective of the manufacturer, but nobody would or could dispute his logic. People don’t drink kasippu out of choice. The price stick, freely used by all governments, has driven imbibers into the arms of the illicit hooch mudalalis. Gone are the days when ‘Pol’ and ‘Gal’ arrack was priced at ten and eight rupees a bottle respectively. Today a bottle of ‘Gal’ costs Rs. 1,600, ‘Pol’ Rs. 1,750 and if you want it double distilled, a bottle would set you back a cool 2,000 bucks.

‘Pol’ of course refers to coconut arrack while ‘Gal’ stood for what was produced out of potable alcohol obtained as a byproduct of the Gal Oya sugar industry. The word “byproduct” was a clear misnomer; the sugar industry, whether at Gal Oya, Pelwatte or wherever, has long been making more money out of the alcohol distilled from the sugar cane molasses than from the sugar itself. This was probably why a previous government took over the listed Pelwatte Sugar Manufacturing Company established to help the country to be self-sufficient in sugar. While a private sector chairman of Pelwatte pre-takeover freely admitted that the company made more money from its alcohol byproduct that from its sugar, where the alcohol Pelwatte produces goes now is anybody’s guess. The budget debate would have been an opportunity to ask that question and get a very useful answer; but that did not happen.

We are writing this in the context of what emerged during the budget debate which ended on Thursday after 20 days of sound and fury with the predictably comfortable passage of Budget 2021. There was a lot discussion there about “artificial toddy,” something that Harry Jayawardena too has been talking about for many years. Matara District MP Buddhika Pathirana (SJB) estimated state coffers were being robbed of as much as Rs. 80 billion in excise revenue by artificial toddy manufacturers exploiting loopholes in the law. Pathirana says that the artificial toddy industry is rooted in the southern coastal area where a cocktail of urea, ammonia, nickel-cadmium from old cell phone batteries and sugar is used in a lethal brew.

He explained that the extent of the problem can be gauged with some simple arithmetic. Apparently only about one and a half liters or toddy can be had from a single coconut palm. Adding up the number of trees tapped and the volumes offered to distilleries, Pathirana estimates a discrepancy of 60-70,000 liters. Dangerously, it’s not only imbibers choosing to down rotgut with the attendant health implications, but also ordinary householders buying what they think is coconut vinegar who are at risk, he has pointed out. The Excise Department is well aware of the existence of this artificial toddy racket, which is a continuing one, although it does not agree that the Rs. 80 billion revenue loss that is alleged is accurate.

DCSL which took over the assets of its state-owned predecessor, the Distilleries Corporation during the Premadasa administration, when the government arrack monopoly (or near monopoly) was ended has long been conscious of the fact that it is a player in a so-called ‘sin industry.’ It has from the time of its first chairman, former Civil Servant V.P. (Totsy) Vittachi, been diversifying into various other businesses. Given that over 90% of what you pay for a bottle of arrack (or a single cigarette for that matter) are taxes the manufacturers are collecting for the government, and the payments to the state are not instantly made, a massive cash tranche is available to them to make other investments. This DCSL has cleverly done over the years, and its holding company, Melstar, is a highly diversified conglomerate into a variety of businesses. Ceylon Tobacco Company (CTC) has not done likewise to the extent of DCSL although it once diversified into insurance like its parent, British American Tobacco. However CTC pays its tax collection to the Treasury on a weekly basis. We do not know how it works where DCSL is concerned.

State Minister Nivard Cabraal who is the virtual Deputy Minister if Finance (the Prime Minister holds the finance portfolio) has called for a report from the Excise Department and the Secretary to the Treasury on matters that emerged in Parliament during the discussion. He acknowledged Pathirana’s useful contribution to the debate and assured follow-up on matters raised. The hard liquor industry has not only been a substantial source of government revenue, but had also produced many millionaires in this country. Arrack has made fortunes for different entrepreneurs from the Dutch and British colonial era when so-called arrack renting was a lucrative business. There has been generous philanthropy arising from such fortunes with, for example, the founding of Visakha Vidyalaya by Mrs. Jeramias Dias (Selestina Rodrigo) of Panadura. Ironically, Arthur V. Dias (popularly known as Kos Mama because of his campaign to plant jak trees), the son of Jeramias Dias, became a leader of the temperance movement at a later time.

It is common knowledge that the illicit liquor industry rampant in the country not only costs the government desperately needed revenue but also is at the root of corruption in the various enforcement agencies. Political patronage to this menace has been freely alleged over the years as have similar allegations with regard to narcotics. Prohibition has not proved a success wherever it was attempted. Government must necessarily balance competing interests including revenue, the cost of alcohol related disease to the healthcare system, the damage drunkenness causes innumerable families and many more in designing its alcohol policies. There’s a lot wrong with what prevails – artificial toddy is just one aspect.



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Editorial

The coming colour

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Though Basil Rajapaksa, Mahinda Rajapaksa and Gotabaya Rajapaksa have resigned in that order, the Rajapaksa clan on the back of which much of Sri Lanka’s present woes are laid, remains alive and kicking and is very much a part of the country’s political equation. When then Prime Minister Ranil Wickremesinghe appointed his first cabinet following GR’s stunning elevation of a one man show as the head of his government, there were no Rajapaksas in the new line up with several old faces dropped. But there was a reappearance of Shasheendra Rajapaksa among the recently appointed state ministers. Now there’s been a public statement by an SLPP grandee that heir apparent Namal baby is suitable for reappointment to the cabinet. There have also been calls for previous ministers to be taken back to the fold. With at least a semblance of normality restored on the fuel and gas front, those out in the cold seem to believe that the time is right to get back to business.

President Ranil Wickremesinghe is all too aware of the national mood and the near unanimous public opinion on the Rajapaksas and the jumbo cabinets we have known too often in our contemporary political history. But these are realities he must live with. Gotabaya is back in the country although it wasn’t that long ago that Wickremesinghe told the Wall Street Journal that he didn’t think the time was right for GR’s return. Though Basil is out of the country for a few months, it is very well known that he continues to pull many of the SLPP’s strings. Mahinda shows up in parliament now and then although he seldom speaks on the public domain. And Namal is knocking at the door.

Though Wickremesinghe very much desires to show the country that he’s running a tight ship at minimum cost to the taxpayer, until the time comes after February 2023 when he is empowered to dissolve parliament, he is the prisoner of the SLPP. It is that party which elected him to office and the Rajapaksas are very much in control there. It is all too clear that he must do what the discredited Rajapaksa party wants him to do at this point of time. Having dragged his feet a little bit about the appointment of the state ministers, he succumbed a few days ago and appointed as many as 38 of them. No effort whatever has been made to justify such appointments. What has only been attempted up to now is to say that they will draw no salary outside their parliamentary emoluments.

Egg has been publicly rubbed on the collective face of the government both by mainstream and social media demonstrating that the difference of a few thousand rupees in salaries drawn is irrelevant compared to the cost of taxpayer paid perks and privileges they will enjoy. Now the president is on the verge of appointing new ministers to the present 20-member cabinet and this is likely to be completed in the short term. The constitution permits the appointment of 30 ministers, which can go up if we have a national government, and fishing expeditions by aspirants are already visible. It has also been said in public that the previous ministers, many of them anathema to the people, must be reappointed. We need not labour the fact that already there are bad hats in office.

Not very long ago we saw former Agriculture Minister Mahindananda Aluthgamage, the public face of then President Gotabaya Rajapaksa’s calamitous ban on chemical fertilizers, saying in parliament that he was not responsible for the ban. He said that fertilizer under his ministry was the subject of a state minister (Shasheendra Rajapaksa now back in office as State Minister of Irrigation). He even claimed that he had canvassed the ban with then President Gotabaya Rajapaksa. The whole country was privy to Aluthgamage’s passionate defence of the ban at that time and saw countless effigies on the minister torched by angry farmers. Yet he has the brass to attempt to distance himself from that action in which he fully participated, in what seems very much like an attempt to return to cabinet office.

President Wickremesinghe has made little headway in his attempt to form a National Government or Government of National Unity. There seems to be few buyers at political party level but individual defections for consideration of office is very much a part of this country’s political history. Already two Samagi Jana Balavegaya MPs, Harin Fernando and Manusha Nanayakkara are in the cabinet. So also seniors of the Sri Lanka Freedom Party (SLFP) like Nimal Siripala de Silva and Mahinda Amaraweera. There are many more SLFPers who are state ministers and of the 14 SLFP MPs elected to the sitting parliament only five remain loyal to party leader Maithripala Sirisena. While some parties have begun domestic inquiries against rebels, few expect them to lose their seats in terms of existing anti-defection laws.

We will know very shortly what the new cabinet will look like and what the 2023 budget will bring for the country. It has already been made clear that the wealthy will have to suffer a major tax blow. Our contemporary history amply demonstrates that the tax administration is very good at squeezing already squeezed lemons and more of that will shortly be in evidence in the context of the prevailing massive tax evasion. That, together with the lack of equity which is a basic principle of taxation, is a long evident fact of life in this so-called democratic socialist republic ours.

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Editorial

Kekilles in overdrive

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Saturday 24th September, 2022

Government politicians are behaving as if the media had done something far worse than the economic crimes they and their leaders have perpetrated against the nation. They are tearing into the media outfits that expose the untold suffering their government has inflicted on the public by bankrupting the country. In Parliament, on Thursday, some government worthies were beside themselves with rage over a story that a poor girl had recently brought some coconut kernel to school for lunch, and teachers had provided her with a decent midday meal. They claimed that the media reports at issue were false, and the principal of the school concerned had said no such thing was ever brought to her notice.

Sri Lankans usually do not believe anything that the media says about governments until it is officially denied. They know that the very opposite of what the powers that be make out to be the truth is true.

State employees are scared of politicians in power and do not dare antagonise the latter, as is public knowledge. The aforementioned school is situated in Minuwangoda, which is Minister Prasanna Ranatunga’s constituency. A few months ago, the Colombo High Court sentenced Minister Ranatunga to two years rigorous imprisonment suspended for five years, and fined him Rs. 25 million, in a case where he had been accused of threatening a businessman and demanding money. (He has appealed against the judgement.) The SLPP parliamentary group has an MP, who summoned a female school principal, abused her in raw filth and made her kneel before him when he was a Chief Minister; he was infuriated because she had refused to carry out an illegal order. Subsequently, the victim gave in to political pressure, and the culprits got off scot-free. One may also recall that during the Mahinda Rajapaksa government, a Cabinet minister tied a public official to a tree as ‘punishment’ for being late for a meeting. The victim chose to grin and bear it. This is a country where a culture of impunity prevails; journalists are harassed or even vapourised for telling the truth; political dissent is violently suppressed; the long arm of the law has become a mere appendage of the government in power, and Justitia unashamedly cosies up to ruling party politicians. So, it is only natural that neither teachers nor the Education Department officials have vouched for the veracity of the news reports about the poor girl who had coconut kernel for lunch.

Having ruined the economy and turned the country into a hellhole, the government is in the same predicament as the proverbial cat which eased itself on a rock; it is making a determined yet futile effort to cover up the mess. The ruling party politicians have gone into overdrive to deny reports of their corrupt deals, rampant malnutrition and other such issues. They have even sought to challenge the reports issued by some UN agencies on poverty, food insecurity, hunger and malnutrition. They have insisted in Parliament that the situation here is not as bad as it is made out to be, but everybody knows that their cock-and-bull narratives are based on stories cooked up by a bunch of stooges in the garb of bureaucrats. Now, they have launched a witch-hunt against whistleblowers. The Health Ministry has initiated an inquiry against President of the Public Health Officers’ Association Upul Rohana, who has revealed that a consignment of Thriposha (a supplementary food item given free of charge to lactating mothers and undernourished children) was found to be contaminated with aflatoxin.

The SLPP politicians have overtaken King Kekille, who according to folk stories, always punished the innocent and spared the wrongdoers whenever he heard cases. He once had a goldsmith punished for a structural fault in a newly-built wall around his palace. On being questioned by the king, the bricklayer concerned said he had been distracted by an attractive woman who had been going past the work site several times a day. The woman, summoned to the royal court, said she had been compelled to make many trips to the goldsmith, who had delayed the delivery of her order. So, the king decided to punish the goldworker.The current rulers must be King Kekille’s descendants.

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Editorial

Barmecide feast and ‘Lotus heaven’

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We are not short of leaders who claim to have laboured tirelessly to achieve national progress. Never do they miss an opportunity to make a public display of their patriotism, and boast of what they call the country’s achievements under their governments. But the abysmal report cards of these worthies have come to light again.

The Professional Forum of Physicians on Medical and Civil Rights (PFPMCR) has made a shocking revelation. It has said that according to the findings of a health survey conducted in the village of Walsapugala, as many as 80% of children there are affected by nutrition disorders with undernutrition and malnutrition among them amounting to 50% and 30% respectively. The plight of these children must have shaken the conscience of every Sri Lankan except those who have been helping themselves to public funds, which could have been used to feed hungry mouths.

The district where Walsapugala is situated is of significance. It is Hambantota, the stronghold of the Rajapaksa family, which has produced Prime Ministers, Presidents and Cabinet ministers. We bet our bottom dollar that no one connected to the Rajapaksas or other wealthy politicians from that area is among the malnourished children of Hambantota. The predicament of the children of Walsapugala represents in microcosm what has befallen the country under successive governments, especially the Rajapaksa administrations.

Hambantota is believed to have benefited from the Rajapaksas’ expensive infrastructural development drive; it boasts an international airport, an international conference hall, an international cricket ground and an international port. The road network there compares with the best in the world. But the living conditions of the people of Hambantota have not improved, at all, if the severe nutrition disorders affecting them is any indication. The same is true of their counterparts elsewhere.

If wasteful expenditure amounting to billions of dollars on useless infrastructural development projects had been curtailed and those funds channelled for agricultural development, children’s nutritional needs could have been taken care of. Many Sri Lankans however seem to enjoy the Barmecide feast their crafty rulers host. The PFPMCR revelation has come while Sri Lankans, troubled by the pangs of hunger, are feasting their eyes on a tall tower in Colombo. They are queuing up near the Lotus Tower to pay for elevator rides to the top of it and take a bird’s eye view of the slums and shanties in Colombo, among other things. A person who visited the tower has likened his experience to a trip to heaven, of all places!

One of the main causes of the current economic meltdown which has led to the prevailing food crisis, soaring inflation and a rise in the rate of malnutrition is heavy borrowings for mega projects that hardly yield any returns but have helped politicians and their cronies enrich themselves. Economic inequality has also contributed to the prevalent nutrition disorders. But those who are at the levers of power do not seem keen to curtail waste, sort out the economy and grant relief to the people. Instead, they are busy feathering their nests. The colony of leeches (read the Cabinet) is expected to expand further.

PFPMCR Chairman Dr. Chamal Sanjeewa has told the media that most schools in the Hambantota District have cancelled morning assemblies because a large number of students faint due to hunger. A similar situation prevails in other districts as well, according to the Ceylon Teachers’ Union.

Many educated, talented youth have already left the country, and others will do so, given half a chance. Long queues are seen near the visa sections of foreign embassies in Colombo. Children are starving and cannot stand erect, much less concentrate on their studies. There is no future for a country which does not care to look after its youth and children. Worryingly, political leaders are busy trying to retain power or regain it; religious leaders are worried about only one thing—the abolition of electricity subsidy for places of worship; business leaders are safeguarding their own interests at the expense of the public, and most people are looking forward to viewing Sri Pada from the top of the Lotus Tower!

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