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Editorial

Don’t eviscerate precious goose

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Thursday 27th February, 2025

The proposed 15% services export tax exemplifies Sri Lanka’s deceptive taxation policy. The NPP government’s Budget 2025 has listed it as a corporate tax, but according to a Bill seeking to amend the Inland Revenue Act, the new tax will apply to all individuals who provide services to external parties and earn foreign exchange. Not even freelancers will be spared. The tax in question will apply to money brought back to Sri Lanka through the banking system.

The services export tax is bound to hinder Sri Lanka’s forex inflow and deliver a crippling blow to the country’s budding tech industry. It may drive Sri Lankan IT professionals working for foreign firms and bringing much-needed forex to park their earnings overseas and/or use informal forex transfer systems such as Hawala and Undiyal bypassing the banking system.

The living conditions of many Sri Lankans who have gone overseas for employment, for want of a better alternative in view of the current economic crisis, are far from satisfactory. Most of these workers are doing odd jobs or have fallen prey to racketeers, as evident from the predicament of dozens of Sri Lankans trapped in the cyber slave camps in Myanmar. Therefore, it defies comprehension why the Sri Lankans earning foreign exchange and helping shore up the country’s forex reserves, without migrating, are not incentivised to earn more in foreign currency instead of being discouraged with taxes.

The government is desperate to increase its revenue to 15% of GDP in keeping with an IMF bailout condition. But in a bid to rally popular support ahead of an election, it has proposed in its Budget 2025 pay hikes for the public sector workers and some relief measures which will take a heavy toll on the state coffers. It is also planning to expand the state service, which is already bursting at the seams, by recruiting as many as 30,000 workers. It cannot increase the existing taxes any more, and its promise to save funds by curtailing state expenditure remains largely unfulfilled. So, it has resorted to measures such as the services export tax regardless of their adverse consequences.

Some international tech companies are expanding their operations in Sri Lanka, and this means more jobs for the local youth and a boost to the country’s forex inflow. The new tax at issue is fraught with the danger of driving those companies as well as talented Sri Lankan youth out of the country. Some of these companies are reportedly planning to shift their operations to other South Asian countries which are offering numerous concessions to them. Is the NPP government promoting foreign investment in other countries? It has failed to be different from its predecessors. It has not been able to attract adequate foreign direct investment despite its braggadocio. It is upbeat about a proposed foreign oil refinery, but cannot specify the economic benefits, which, it says, will accrue to this country! It should try to increase the forex inflow through available sources such as those who work for international firms and earn in foreign currency without leaving the country. These professionals can also be considered Rata Viruwas (an honorific politicians use for expatriate workers), though based here. They deserve encouragement.

It is hoped that the government will give the proposed services export tax a rethink. It must not eviscerate the goose that lays the golden eggs. Let it be urged to explore alternative ways and means of increasing its revenue, such as downsizing the state sector and rationalising its welfare expenditure. It is reportedly planning a heavily subsidised basket of goods in view of the local government polls slated for April. This is an election bribe or chanda gundu. What has the country gained from the fuel subsidy for fishers? The fertiliser subsidy has not helped bring down the prices of rice. Paddy farmers are refusing to sell their produce to the state-owned Paddy Marketing Board, which is trying to build a buffer stock to regulate the rice market.

The Opposition has claimed during the budget debate that online casino is not taxed. If so, why has the government baulked at imposing a new sin tax to boost its revenue and chosen to commit the sin of strangling the local tech sector and driving more Sri Lankan professionals out of the country? If it manages state funds frugally and streamlines revenue collection, it will be able to reduce its overdependence on tax and tariff increases and new taxes.



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Editorial

Self-righteous rhetoric and political circuses

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Wednesday 13th May, 2026

Former President Mahinda Rajapaksa yesterday visited the Commission to Investigate Allegations of Bribery or Corruption (CIABOC), made a statement on the Airbus bribery scandal and returned home. A large number of his supporters flocked to Colombo to pledge solidarity with him. Speaking at a District Coordination Committee meeting at the Matale District Secretariat yesterday, President Anura Kumara Dissanayake stated that nobody was above the law, and anyone could be questioned in an investigation. He claimed that his predecessors had violated the Constitution and committed other offences, with impunity. His reference was obviously to President Rajapaksa making a statement to the CIABOC. By making that claim, President Dissanayake left room for allegations that he has a vested interest in the ongoing Airbus scandal investigation and defends the CIABOC action against Rajapaksa.

Yesterday’s show of strength near the CIABOC was organised by the SLPP. It is an affront to the intelligence of the public for anyone to claim that it was the result of a spontaneous outburst of public anger at an alleged move to frame former President Rajapaksa. Such protests are tantamount to attempts to intimidate the CIABOC. It is the organisers of such events who were responsible for Rajapaksa’s defeat in the 2015 presidential election and his ouster as Prime Minister in 2022, when they acted like the proverbial monkey that killed his sleeping royal master by striking a mosquito with the king’s own sword. They attacked the peaceful Aragalaya protesters at Galle Face, triggering widespread retaliatory attacks. The rest is history.

President Dissanayake yesterday said in Matale that his government had ensured that nobody was above the law and urged the public to bring instances of selective law enforcement, if any, to his attention. Is he unaware that the NPP politicians are more equal than others before the law? Kumara Jayakody was not arrested over the coal procurement scam, which is believed to have caused a loss of more than Rs. 10 billion to the state coffers, and led to a situation where a colossal amount of diesel has to be burnt daily to produce power to meet a generation shortfall at Norochcholai due to the use of low-grade coal imported by a company favoured by the government while Jayakody was the Minister of Energy. Power tariffs have been increased to recover the losses caused by the substandard coal imports. It may be recalled that Keheliya Rambukwella was arrested and prosecuted during the previous government for procuring substandard medicines while he was the Health Minister. That administration initially defended Rambukwella but did not stoop so low as to prevent his arrest and make a cover-up attempt by setting up a presidential commission of inquiry to probe all drug procurement issues in the Health Ministry under successive governments. President Dissanayake has appointed a presidential commission to investigate alleged irregularities in coal procurement since 2009! They must be probed, but the allegations against Jayakody are so serious that they should have been investigated separately on a priority basis.

Ironically, while President Dissanayake was waxing eloquent about his government’s commitment to upholding the rule of law, bashing his predecessors for having violated the Constitution, and claiming that his government had ended the culture of impunity, the Joint Opposition levelled a very serious allegation against him. Former Minister of Justice and Constitutional Affairs Prof. G. L. Peiris, addressing the media in Colombo, said that at a recent May Day rally, President Dissanayake had committed a serious offence by asking the public to get ready to hail the judgement to be delivered in a court case on 25 May. Pointing out that only the judge who heard a case was privy to the judgement therein before it was delivered and could not inform a third party of it or have any discussion thereon, Prof. Peiris said interference with the judiciary was a very serious offence, according to the Constitution, and a person who committed it was liable to one-year imprisonment and the suspension of civic disabilities for five years. He said the Joint Opposition had brought the President’s statement at issue to the attention of the Chief Justice and would take it up with international professional associations.

The public may not have a high opinion of the Opposition, which has quite a few tainted politicians among its ranks, but shouldn’t the JVP-NPP government and their leaders turn the searchlight inwards and put their own house in order before preaching to others about the virtues of good governance?

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Editorial

Enriched uranium and poverty of scruples

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Tuesday 12th May, 2026

US President Donald Trump yesterday rejected Iran’s response to his peace proposal. He wants the conflict ended on his own terms, but Iran is not amenable to that idea. Oil prices have gone up again.

The economic cost of the US-Israeli war on Iran is incalculable, as is obvious. There has been a welcome pause in the conflict, thanks to a fragile ceasefire, but economies across the world are still reeling due to a global energy crisis. CEO of Saudi Aramco Amin Nasser is of the view that the world has lost about one billion barrels of oil over the past two months, and it will take energy markets a considerable time to stabilise even if the oil supplies resume via the Hormuz Strait, the closure of which has curtailed shipping and sent energy prices through the roof. It is not only energy supplies that have suffered due to the US-Israel military campaign; many countries are experiencing crippling fertiliser shortages as well, so much so that the Food and Agriculture Organization of the UN has warned of a possible decline in global agricultural output. Most of all, the human cost of the war has been enormous for Iran.

Israeli Prime Minister Benjamin Netanyahu, who considers the war on Iran a dream come true for him, and is trying to turn his country’s military might into political gain, has reportedly said that there is still “work to be done” in Iran. He says Iran has retained many of the capabilities it had at the start of the war. Iran has not given up its enriched uranium or dismantled its nuclear sites, he has said. This claim is at variance with President Trump’s statement that the US military has “beaten and completely decimated” Iran. Netanyahu himself has also bragged that Iran has been militarily weakened as never before.

Netanyahu wants enriched uranium in Iran removed urgently. He says that can be done as part of an agreement to be reached. He has stopped short of mentioning any timeline for the proposed task. Trump has expressed a similar view. An Iranian news outlet linked to the country’s armed forces has denied reports that Tehran agreed to allow its enriched uranium stocks to be removed as part of talks with the United States. Thus, the uranium issue is sure to stand in the way of finding a lasting solution to the West Asia conflict, saving lives and properties and facilitating uninterrupted energy and fertiliser supplies via the Hormuz chokepint.

The US-Israeli military campaign has apparently strengthened Iran’s resolve to acquire nuclear capability. In a world where nuclear weapons are the currency of power, Tehran is not likely to give up its nuclear programme. Any country with nukes is a danger to the world, but only the US has so far carried out nuclear attacks. Not even North Korea has done so. Those who got a head start in the nuclear race decades ago have built huge nuke stockpiles, which are believed to be sufficient to blow up this planet several times over. The new world order based on the law of the jungle has left many countries struggling to safeguard their independence, and some of them are pursuing their nuclear ambitions in keeping with what can be described as the de Gaulle doctrine.

Charles de Gaulle rightly argued that no country without the atomic bomb could properly consider itself independent. He maintained that national sovereignty required an autonomous nuclear force, which he called the force de frappe, which alone, in his opinion, was the ultimate guarantee of political independence and great-power status. So, it is only natural that countries that feel threatened and have the wherewithal are trying either to shore up their nuclear stockpiles or to arm themselves with nukes.

While Trump is devising ways and means of grabbing Iran’s enriched uranium, in a dramatic turn of events, the FBI and other federal agencies have launched investigations into the deaths or disappearances of about 10 top US nuclear and space scientists, according to international media reports. US House Oversight Committee Chairman James Comer has suggested, in an interview with Fox News, that there has been a foreign involvement in these deaths and disappearances. Republican Congressman Eric Burlison has claimed they have “all the hallmarks of a foreign operation” and cited China, Russia and Iran as potential lines of inquiry.

Self-righteous powerful nations’ calls for nuclear non-proliferation to make the world safe ring hollow. If the much-peddled argument that no more countries should acquire nuclear capability to ensure global safety is to gain credibility and wider acceptance, the proponents of it must accelerate nuclear disarmament, decommission their arsenals and lead by example. Most of all, they ought to take cognisance of what US President Dwight D. Eisenhower said in his famous “Cross of Iron speech” on war in 1953, highlighting the opportunity cost of military spending and stressing that resources used on weapons are stolen from the people struggling to meet their basic needs: “Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed.” How true!

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Editorial

A potential problem to be managed

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Monday 11th May, 2026

Tamilaga Vettri Kazhagam (TVK) leader Chandrasekar Joseph Vijay has achieved his chief ministerial dream in Tamil Nadu, with the help of some other parties, including the Congress. His meteoric rise to power was possible mostly due to his popularity as a film star, his unrealistic promises and a massive protest vote fuelled by anti-politics. Winning elections is one thing, but living up to people’s expectations by fulfilling campaign promises is quite another. In politics, a beginner’s luck rarely lasts long. If implemented, the freebies promised by Vijay to garner favour with voters, are estimated to account for more than 50% of Tamil Nadu’s tax revenue. Thus, Vijay has his work cut out to prevent his first chief ministerial term from facing the same fate as his first film, which reportedly became a box office bomb.

The paradigm shift in Tamil Nadu politics has sent the Colombo commentariat into overdrive, with divergent assessments of its implications for Sri Lanka and Indo-Lanka relations. Some commentators are of the view that Vijay’s anti-Sri Lanka utterances were mere campaign rhetoric; Vijay himself will forget them with the passage of time, and even if he wants to pursue his pledges, especially the one to retrieve Katchatheevu, there will be nothing he cannot do, as New Delhi considers the issue long settled. The proponents of this argument have apparently ignored the fact that the Indian Centre is swayed by Tamil Nadu, and New Delhi has even resorted to extreme measures to appease the Tamil Nadu politicians and further its own interests at the expense of Sri Lanka. India trained, armed and funded pro-Eelam terror groups, and rammed the Indo-Lanka Accord down President J. R. Jayewardene’s throat in 1987, paving the way of devolution. India was hoist with its own petard, with the LTTE turning against it, a few years later, and the situation changed.

The current world order is anything but “rules based”. International pacts, accords, covenants, treaties, charters, etc., become worthless when the powerful signatories thereto feel like violating them. The US has violated the UN Charter, perhaps for the umpteenth time, by abducting President of Venezuela Nicolás Maduro and his wife. It has also carried out unprovoked air strikes on Iran, killing its Spiritual Leader and thousands of civilians besides destroying assets worth billions, if not trillions, of dollars.

It has been alleged that at the height of the 2022 uprising here, following the forced resignation of President Gotabaya Rajapaksa, Indian High Commissioner Gopal Baglay pressured Speaker Mahinda Yapa Abeywardene to take over the presidency in violation of the Constitution. Abeywardene told Parliament subsequently that the goal of those who tried to force him to appoint himself the Acting President was to plunge this country into anarchy. Baglay allegedly acted in violation of the Vienna Convention on Diplomatic Relations, which requires diplomats to refrain from interfering with the internal affairs or politics of the host countries. Curiously, this very serious allegation remains unprobed though the grandees of the JVP-NPP government and the SJB-led Opposition wrap themselves in the flag and often declare their commitment to protecting the national interest.

The possibility of the new Tamil Nadu administration escalating the issue of illegal fishing in Sri Lankan waters to such an extent that New Delhi may feel compelled to intervene more assertively, if not aggressively, cannot be ruled out. In 2013, the then Minister of Fisheries and Aquatic Resources Development Dr. Rajitha Senaratne disclosed that certain Tamil Nadu politicians owned trawlers and rented them out on the strict condition that they be used for poaching in Sri Lankan waters. These troublemakers are likely to step up their illegal fishing operations to belittle Sri Lanka’s sovereignty and bring New Delhi and Colombo on a collision course.

Responses to vital bilateral issues should not be grounded solely in suspicions and perceptions if they are to be workable. Tamil Nadu politicians’ hostility towards Sri Lanka is a problem to be managed diplomatically. Foreign relations are layered and dynamic, and diplomacy requires calibrated responses to contentious issues. It is, however, prudent to be cautious.

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