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DEW: Tax amnesty unconstitutional, encourages corruption

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… reminds govt. SC ruling that there cannot be two systems for taxpayers

 

By Shamindra Ferdinando

Former General Secretary of the Communist Party Dew Gunasekera says the incumbent government should never have considered tax amnesty as part of overall measures to mitigate the growing financial crisis.

Since the 1960s, about dozen tax amnesties had been offered, but they failed to produce the desired results, Gunasekera said.

The former minister was responding to the ruling Sri Lanka Podujana Peramuna (SLPP) declaration that it was ready to offer tax amnesty. Gunasekera predicted that the SLPP’s bid, too, would fail as in previous attempts.

Mahajana Eksath Peramuna (MEP) Chief and the Leader of the House, Dinesh Gunawardena, presented the relevant Bill to the House last Tuesday (20).

Both the Samagi Jana Balavegaya (SJB) and the Janatha Vimukthi Peramuna (JVP) have moved the Supreme Court against the Bill. In terms of the Constitution, such a Bill can be challenged in the Supreme Court within seven days after its tabling in the House. State Finance Minister in the previous UNP government and National List lawmaker Eran Wickremaratne and former MP Sunil Handunetti moved the SC on behalf of the SJB and the JVP, respectively.

Responding to a query, Gunasekera said that he served the Income Tax Department at the time the then Finance Minister Dr. N.M. Perera introduced a tax amnesty on behalf of the SLFP-LSSP coalition during Sirimavo Bandaranaike’s premiership.

In a brief interview with The Island, Gunasekera alleged that the cash-strapped incumbent administration had offered tax amnesty probably because previous governments did so. Declaring that tax amnesties caused further financial deterioration and encouraged fraudulent activities, Gunasekera emphasised that the only remedy was to streamline the revenue collection process by taking tangible measures to tackle corruption and irregularities in the system.

Explosive report

The former lawmaker pointed out that the Finance Bill was presented to Parliament on Tuesday, the day the Committee on Public Accounts (COPA) Chairman Prof. Tissa Vitharana presented an explosive report that dealt with tax evasion. Pointing out that COPA had faulted the Customs and Motor Traffic Department as well as Parliament for the sorry situation; Gunasekera urged the government to implement the recommendations made by the parliamentary watchdog committee.

Gunasekera resigned as the General Secretary, CP, in late August last year. He was replaced by Dr. G. Weerasinghe.

Asked whether the CP would make representations to the SLPP against the move, Gunasekera emphasised that the Supreme Court, during Chandrika Bandaranaike Kumaratunga’s presidency, declared that there couldn’t be two groups of taxpayers. A five-member bench asserted that tax amnesty to those who had defrauded would be unconstitutional, Gunasekera said, adding that the SC gave that opinion when the then President sought an opinion in respect of a tax amnesty declared by the late K.N. Choksy, PC, on behalf of the UNP-led United National Front government. The SC asserted there couldn’t be two systems for taxpayers – one for the honest and another for those who practiced crooked methods.

Gunasekera stressed that it was not a determination but an opinion expressed by the SC in response to a query raised by President Kumaratunga exercising her constitutional privilege. Gunasekera said that Choksy, who had served as a member of Parliament from 1989 to 2010 continuously couldn’t have been unaware of the unconstitutionality of the tax amnesty but didn’t have any choice, but to carry out party directive.

Against the backdrop of the massive devastation caused by the raging Covid-19 epidemic, Sri Lanka should without further delay reach a consensus on a national economic policy meant to revive the economy. The much deteriorated national economy couldn’t be saved from ruination by silly measures such as tax amnesty, the outspoken politician said, urging the government to study the opinion expressed by the SC on the contentious matter of tax amnesty. Pointing out the urgent need to take remedial measures, Gunasekera said that the economy was in such a pathetic state though vast majority of lawmakers representing political parties in the current parliament seemed to be clueless where we were heading. Gunasekera compared the tax amnesty with printing money.

Responding to another query, the former minister said that he was quite surprised that those who had approved the Bill presented in Parliament last week didn’t take the SC opinion on the tax amnesty into consideration.

Both Wickremaratne and Handunetti stated in their petitions that as several provisions in the Bill were inconsistent with the Constitution it should be passed with a special majority in Parliament as well as required the approval by the people at a referendum to become law.

Gunasekera also referred to a recent ruling given by the Supreme Court of India in respect of a two-year-old murder case involving the husband of Madhya Pradesh Bahujan Samaj Party (BSP) lawmaker. The SC declared that India couldn’t have parallel legal systems, one for the rich and another for the poor, Gunasekera said, urging those in authority to be responsible for their actions.

Drastic measures

Pointing out that no less a person than President Gotabaya Rajapaksa admitted that challenge in meeting the annual debt repayment, amounting to USD 4 bn, and Energy Minister declared the banking system faced collapse unless drastic measures were taken, the veteran Communist said that the government should really examine the situation.

Referring to proceedings of parliamentary watchdogs issued since the last general election, Gunasekera said that the government should act on them. Instead of taking punitive action against those large scale defaulters of revenue to the Treasury, officialdom continued with systems which helped the crooks, Gunasekera said. “We should be ashamed of this situation,” the former minister said, adding that the Customs and Motor Traffic Department having deprived the Treasury of staggering Rs 3 bn was a case in point.

At the time of Dr. N.M. Perera’s tenure as the Finance Minister, government revenue had been 24 percent of the Gross Domestic Product (GDP), Gunasekera said. By 2019, it had dropped to 09 percent and perhaps even less now, the former MP said, urging the government to address that issue. According to him, one of the primary reasons for the crisis and overall chaotic situation was wide gap in direct and indirect tax. Ideally direct and indirect taxes should be 65 percent and 35 percent, respectively though at present indirect taxes stood at 85 percent and direct just 15 percent.

Gunasekera said that he couldn’t comprehend why those responsible didn’t make any genuine effort to correct the rapidly deteriorating situation.

Asked whether he backed economist Dr. Harsha de Silva’s call on behalf of the SJB that the government should seek immediate intervention of the International Monetary Fund (IMF) to pave way for restructuring of the outstanding external debt, Gunasekera emphasised that he strongly opposed such intervention. Declaring that the IMF shouldn’t be involved under any circumstances,

Gunasekera urged the government to act fast to streamline the revenue collection process, tackle waste, corruption and irregularities and bring in required amendments with the support of all political parties represented in parliament or face the consequences. He said that Sri Lanka should accept IMF grants provided at times of crisis such as 2004 tsunami and world economic crisis four years later.

Gunasekera appreciated Energy Minister Gammanpila’s admission that the national economy was in such a perilous situation the government couldn’t afford to delay the sharp increase in the price of petrol.

Commenting on the ongoing wave of strikes, Gunasekera said that the government should realize whatever the demands put forwarded by various trade unions affiliated to political parties, their primary intention was salary increase and a range of other benefits. But, the SLPP government lacked the wherewithal to meet those demands, the former MP said. Whatever excuses ruling party politicians gave the naive public, the unpalatable truth was the Treasury couldn’t provide the required funds, Gunasekera said. So, let there be a consensus among political parties that whoever is in power, the Treasury was in a bad shape and austerity measures were needed.

Gunasekera warned of economic catastrophe unless the government took remedial measures. “I sincerely hope, both the government and the main Opposition stop playing politics with issues at hand and take tangible measures. They can begin by consulting COPE, COPA and COPF while the move to bring in tax amnesty can be discarded.”

 



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Lanka, Turkish FMs powwow in NY

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Sri Lankan and Turkish FMs meet (pic courtesy Foreign Ministry)

Concerns over selective use of human rights by section of int’l community

Foreign Minister G.L. Peiris has expressed condolences on the death of two Turkish nationals as a result of the Easter Sunday terrorist attacks when he met the Turkish Foreign Minister Mevlüt Çavusoglu at the Turkish House, the Chancery building of the Turkish Permanent Mission, in New York, for a bilateral meeting between them, on the sidelines of the 76th Session of the United Nations General Assembly.

Prof. Peiris is on President Gotabaya Rajapaksa’s delegation to New York.

Prof. Peiris has given an update on the investigations underway and the legal processes being taken to try those that were involved that had linkages to extreme groups. The two Ministers expressed the need to confront terrorism in all its forms as well as linkages to the rise of extremism and spoke against the politicization of human rights and selective use of human rights as tools by some parties, and pledged to expand international cooperation in the United Nations and other fora.

The following is the text of the statement issued by the FM: “Foreign Minister Çavusoglu recalled fondly his fruitful two-day visit to Sri Lanka in 2016. The Minister appreciated the arrangements extended to him during the visit. Foreign Minister Peiris also fondly recalled a number of visits to Turkey and commented on the rich experiences he had. The Foreign Minister of Turkey was happy to observe that a Hony Consul of Sri Lanka would take office shortly in his hometown.

In evaluating their mutual visits, the two Foreign Ministers noted that it would be an opportune time to enhance further contacts by visits and interactions at other levels, to strengthen the excellent ties of friendship between the two countries, particularly economic and trade ties. Foreign Minister Çavusoglu noted that despite the two countries being geographically far, the ties between the two were very close.

Foreign Minister Peiris noted the generous assistance given to Sri Lanka from Turkey during the COVID-19 pandemic with the provision of ventilators and other equipment and appreciated that Turkey had also extended support in the aftermath of the 2004 Boxing Day tsunami where housing was provided. The Ministers appreciated that bilateral trade between the two had steadily increased from US 100 Million and was projected to reach US 200 million in the current year.

Foreign Minister Peiris highlighted that there was a need for Sri Lankan exports to Turkey to diversify from its 80% consisting of tea and noted that there was tremendous potential between the two countries to boost economic, trade and investment in growth areas such as construction and the pharmaceutical industries, where Turkey had expertise and Sri Lanka was looking at developing this area by having specific economic free zones for the manufacture of pharmaceuticals for the local market and beyond. The Turkish Foreign Minister underscored that the Turkish construction sector was the world’s second largest and that they had a number of projects globally and not just in their region.

The two Ministers expressed interest to finalise important agreements on Avoidance of Double Taxation and on Investment Promotion and Protection that could serve to provide opportunities for joint projects, investments and initiatives between both countries.

The Foreign Minister of Turkey noted their experience of successful Private to Public Projects for infrastructure, such as Turkey’s second international airport that would boost their role as an important global international hub.

The two Ministers also discussed enhancing people to people contact, including possibilities of exploring air connectivity between Ankara and Colombo and code-share flights to the region that could boost linkages and ties to new levels, including exchanges between the respective Chambers of Commerce and business sectors. Both sides undertook to expedite respective agreements that had been finalized and were at the last stages of implementation.

Foreign Minister Çavu?o?lu noted that he was to visit Sri Lanka, but that the visit had to be postponed due to the COVID pandemic. Foreign Minister Peiris extended an invitation for the Turkish Foreign Minister to visit Sri Lanka in the near future.

The two Ministers looked forward to expanding the friendly and close ties and expressed hope that further interaction may commence in the aftermath of the covid pandemic.”

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Shortage of 120,000 Sputnik V second jabs causing heartburn to many in Kandy District resolved

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By Chaminda Silva

Another consignment of the Russian-made Sputnik V anti-Covid vaccine purchased by Sri Lanka was brought to the country on Sunday (19).

A batch of 120,000 doses of the vaccine was flown to the Katunayake Bandaranaike International Airport (BIA) by an Emirates cargo plane from Dubai. The consignment was transported from Moscow, Russia, to Dubai, and from there to the BIA.

They were transported to the Colombo Central Vaccine Storage Complex by refrigerated trucks of the Sri Lanka Pharmaceutical Corporation.

Minister of Health Dr. Keheliya Rambukwella last week said the 120,000 doses of Sputnik-V vaccine would be given to the people of the Kandy District who received the Sputnik-V vaccine as the first dose.

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Lanka receives another 20 railway passenger coaches from India

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A railway passenger coach being unloaded from a ship at the Colombo Port.

SriLanka has received another 20 state-of-the-art railway passenger coaches from India as part of the supply of 160 coaches to the Sri Lankan Railways by the Rail India Technical and Economic Service (RITES), which is being financed through an Indian Line of Credit.”In line with India’s continuing commitment to assist Sri Lanka in the development of its railway infrastructure, a consignment of 20 railway passenger coaches supplied by Rail India Technical and Economic Service (RITES) Ltd, reached Colombo Port on September 17, 2021,” Indian High Commission in Colombo said in a press release.

It said: This consignment is a part of the contract to supply 160 passenger coaches to Sri Lanka Railways, funded under an Indian Line of Credit of USD 318 million. The value of this contract is USD 82.6 million.With this consignment, a total of 60 coaches out of 160 have been supplied to Sri Lanka and 20 more coaches are ready to be shipped from India. The first lot of passenger coaches had arrived in Sri Lanka in March 2021, following which requisite trials were conducted.

These ‘India-made’ modern passenger coaches have been custom made and built as per the requirements of Sri Lanka Railways. Under the Line of Credit of USD 318 million, RITES Ltd is also scheduled to supply two AC diesel multiple units (DMU) to Sri Lanka Railways. The first AC DMU set (13 coaches) is ready for shipment from India and is waiting for nomination of a ship by Sri Lanka.

Other projects under this line include Up-gradation of the Railway Line from Maho to Omanthai (128 kms), Maho-Anuradhapura Signaling project, Double Tracking of Railway Line from Polgahawela to Kurunegala, etc.

It may be noted that RITES Ltd has previously supplied 6six DMUs (contract completed in October 2019) and 10 Diesel Locomotives Railways (contract completed in June 2020) to Sri Lanka, funded under a separate Line of Credit. India’s overall development assistance to Sri Lanka is close to USD 3.5 billion. This includes projects/initiatives under Lines of Credit as well as grant. Development of railway infrastructure in Sri Lanka is a sector of special focus, in line with the priorities of the Government and people of Sri Lanka.In this connection, reconstruction of railway lines (268 Kms), installation of signal and telecommunication systems (330 Kms), and upgrading of coastal railway line (118 KM) have already been completed. Various other projects are at different stages of implementation.

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