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Explanation sought from govt; Douglas silent on issue at Romesh de Silva Committee



North granted land powers:

By Shamindra Ferdinando

Sri Lanka’s Ambassador in Myanmar, Prof. Nalin de Silva, has said that the government owes an explanation as regards EPDP leader Douglas Devananda’s recent claim that the current administration granted the Northern Province (NP) land powers in terms of the 13th Amendment to the Constitution.

Responding to The Island report headlined ‘North granted land powers’ published on 19 Feb, Prof. de Silva emphasised the responsibility on the part of the government and Devananda, who holds the fisheries portfolio to set the record straight as far as he was concerned Provincial Councils never received police and land powers.

The NP consists of the administrative districts of Jaffna, Kilinochchi, Mullaitivu, Mannar and Vavuniya. Prof. de Silva challenged Devananda’s claim that the NP had received land powers hitherto enjoyed by other Provincial Councils.

The retired Academic underscored the pivotal importance in establishing whether provinces other than the North exercised land powers before it was granted the same.

According to a missive from Prof. de Silva received by The Island, the academic asked what were the specific land powers granted to the North, did the government act in terms of the 13th Amendment to the Constitution and when exactly such powers were granted? Ambassador de Silva pointed out that even in the absence of the 13th Amendment to the Constitution; respective Land Commissioners enjoyed certain powers. Therefore, it would be pertinent to ask whether powers in terms of the 13th Amendment, too, had been granted, Prof. de Silva said pointing out that Devananda had faulted Public Security Minister retired Rear Admiral Sarath Weerasekera for taking a public stand against the devolution of power to the Provinces.

Prof. de Silva said that the vast majority of the Sinhala community was of the same opinion that if necessary a referendum could be held on the devolution of powers.

He referred to a court ruling that a particular land matter couldn’t be dealt in terms of the 13th Amendment to the Constitution.

The academic turned diplomat questioned the rationale behind the EPDP leader’s claim. Although politicians routinely made all sorts of claims, Devananda’s declaration couldn’t be taken lightly as he was a member of the cabinet of ministers.

Prof. de Silva speculated on the possibility of Devananda’s claim being part of propaganda as he battled with other Tamil political parties based in the Northern Province.

Recently, the Indian High Commission discussed with TMVP lawmaker Sivanesathurai Chandrakanthan alias Pilleyan and former MP Vinayagamoorthy Muralitharan aka Karuna, both former members of the LTTE, the need for the full implementation of the 13th Amendment to the Constitution.

Referring to the roles played by President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa in the government and the SLPP, respectively, Ambassador de Silva appreciated the recent decision taken by SLPP constituents to meet under the President’s leadership. He said that the decision should have been taken earlier. Emphasizing that President Gotabaya Rajapaksa was the leader of the SLPP-led coalition in power, Amb de Silva said that Minister Devananda had quite rightly recognized the ground realities. Prof. de Silva said now that the SLPP constituents would meet once in two weeks, Devananda would get an opportunity to discuss matters of mutual interest such as the operation of Provincial Councils system with the focus on land powers.

Amb. de Silva explained that it was important to understand who was in control of the incumbent administration. The mathematician emphasized that the coalition led by President Gotabaya Rajapaksa was in control, not the SLPP as believed by many.

Meanwhile, Minister Devananda on Saturday (20) appeared before the government appointed 9-member committee tasked with formulating a new Constitution. The committee headed by Romesh de Silva, PC is in the process of receiving representations from political parties. Well informed sources told The Island that during Saturday’s representations Minister Devananda didn’t make reference to the NP being granted land powers.

Successive governments refrained from implementing land and police powers though President JR Jayewardene set up Provincial Councils in terms of the 13th Amendment enacted under Indian pressure in the late 80s with those provisions.

All Provincial Councils are defunct due to the failure on the part of the previous government to conduct elections though Governors appointed by the executive run them. Government sources said that a section of the government was opposed to polls before Romesh de Silva’s committee finalized its proposals. Sources said that the proposed Constitution would be ready by April for consideration of the cabinet.

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Personal income tax shock dims economic activities



ECONOMYNEXTSri Lanka’s personal income tax hikes have hit economic activity in the first quarter though despite currency stability helped businesses cut prices, Hemas Holdings, a top consumer goods group has said.As the currency stabilized, as central bank ended contradictory money and exchange policy conflicts, businesses had cut prices. Mainstream economists generally claim that price falls lead to delayed transactions and try to generate positive inflation through money printing, though businesses believe otherwise.

“The market witnessed price reductions and promotional trade schemes to stimulate consumption,” Hemas Holding told shareholders in the March quarterly statement.

“However, changes made to the personal income tax structure severely impacted modern trade sales volumes as consumers rationalised their purchases under reduced disposable income levels.”

Sri Lanka hiked personal income tax rates in 2023. Value added taxes were raised to 15 percent from 8 percent last year. Another 2.5 percent cascading tax was imposed on top of VAT, the effect of which was estimated to be around 4.5 or more through the cascading effect.

While value added tax allows the government to get tax revenues after citizens make transactions and getting the economy to work, based on best decisions needed to drive the economy to satisfy real needs, income tax kills economic decisions and transfers money to state actors, analysts say.

Net gains on income tax therefore comes at a cost of lost value added tax as well as killed real economic activities which would otherwise have been based on decisions of those who earned the money.

UK also almost doubled VAT in 1979, also to 15 percent, cut the base income tax rate and widened thresholds above inflation to give choice to individuals, amid criticism from Keynesian style or mainstream economists to recover the economy, after two back-to-back IMF programs failed to deliver concrete results, analysts point out.At Hemas Holdings, group revenues went up 52.6 percent to 32 billion rupees in the March 2023 quarter from year earlier amid price inflation as the rupee fell, and cost of sales went up 45.1 percent to 22.2 billion rupees, allowing the group to boost gross profits 72 percent to 9.8 billion rupees, interim accounts showed.

However, administration costs went up 54 percent, selling and distribution costs went up 36 percent, and finance costs went up to 1.3 billion rupees. Profit after tax was flat at 1.06 billion rupees.Sri Lanka’s central bank stabilized the rupee in the second half of 2022 after the rupee collapsed from 200 to 360 to from two years of money printing and also removed a surrender rule in March allowing the exchange rate appreciate.

The US Fed also tightened policy from March 2022 helping bring down global commodity prices after triggering inflation not seen for 40 years through Coronavirus linked money printing or accommodating a real shock through monetary expansion.

“While the modern trade channels witnessed a slow down due to the adverse impact of the tax reforms and high cost of credit on the middle-class urban population, the general trade channels experienced significant growth and increased foot fall,” Hemas told shareholders.

“The decline in global commodity prices in the second half of the year, enabled the business to make price reductions across the portfolio.

“However, the benefit of appreciation of the Sri Lankan Rupee in March 2023 was not seen during the quarter due to the lag effect but is expected to realise in the quarters to come, provided the current economic conditions prevail.”

Hemas is also has operations in Bangladesh where the central bank is also buying up government securities with tenors as long at 20 years to mis-target the interest rate, triggering forex shortages and depreciating the Taka, according to analysts who study the country.

Inflation had hit 9.3 percent in Bangladesh by March.

“In the face of numerous challenges including slowdown in the global economy, depreciation in Taka, heightened inflation and depleting foreign currency reserves, the country entered an IMF programme in January 2023,” the firm said.

“The value-added hair oil market witnessed a degrowth, as consumers curbed consumption in many non-essential items and switched to value-for-money alternatives.”

Mainstream economists mis-target rates to boost growth known as either monetary stimulus or bridging an output gap, though the effort result in instability and economic contractions.

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