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How tax revision that caused revenue loss of Rs 500-600 bn triggered collapse …



Dr. Godahewa dealt with anatomy of developing crisis

By Shamindra Ferdinando

SLPP lawmaker Dr. Nalaka Godahewa has alleged that those who managed the economy during Gotabaya Rajapaksa’s tenure as the president conveniently failed to take remedial measures though alleged faults were pointed out.

Dr. Godahewa, a key member of the dissident group that voted against the emergency said the then President Gotabaya Rajapaksa could have averted the disastrous consequences if corrective measures were taken. However, the decision makers remained committed to previously taken decisions regardless of the consequences, one-time Viyathmaga activist alleged.

Addressing a group of supporters at Gampaha recently, Dr. Godahewa cited the much disputed tax restructuring that had been introduced soon after Gotabaya Rajapaksa’s overwhelming victory at the 2019 presidential election. Pointing out that tax revisions deprived the government Rs 500-600 bn annually, the Gampaha District MP questioned the failure on the part of the decision makers to take remedial measures. Action could have been taken in 2020 or 2021, but the powers that be chose to ignore criticism pertaining to the tax revisions, Dr. Godahewa said.

The government abolished a range of taxes, including PAYE (Pay As You Earn), NBT (Nation Building Tax), Withholding tax, Capital Gain tax imposed on the Colombo Stock Exchange, Bank Debit tax and unprecedented reduction of VAT (Value Added Tax). In addition to those revisions 15% VAT and the 2% NBT which amounted to 17% imposed on all goods and services were unified and reduced to 8%, effective from Dec 01, 2019. Controversial decision in this regard has been taken at the first cabinet meeting of the Gotabaya Rajapaksa government held on Nov 27, 2019.

Total income dropped to Rs 1,373 in 2020, though total revenues for 2018 and 2019 had been Rs 1,950 bn and Rs 1,900 bn, respectively.

Shouldn’t those decision makers be held responsible for a much bigger budget deficit and continuously printing of money to meet a shortfall of Rs 2,000 bn annually? he asked.

Though Easter attacks, the pandemic and the resultant body blow to the vital tourism sector and steep drop in migrant worker remittances aggravated the situation, the first time entrant to parliament primarily faulted President Gotabaya Rajapaksa for the current crisis. Dr. Godahewa said that having repeatedly assured the electorate he wouldn’t allow family rule, President Rajapaksa placed the economy in the hands of those who mismanaged the economy over the past several decades. Dr. Godahewa pointed out that following the general election in August 2020, those who had been rejected in 2015 received cabinet portfolios. In the wake of the country being declared bankrupt, those who had been overwhelmingly rejected in 2019 received an opportunity to regain power.

The former media minister was referring to UNP leader securing parliamentary approval to complete the remainder of Gotabaya Rajapaksa’s mandate.

Dr. Godahewa asked whether longstanding issues at hand could be addressed by the above-mentioned two groups swapping political power from time to time and in some instances working together. The outspoken politician quoted Fitch Ratings as having recently stated that far reaching changes couldn’t be expected under President Ranil Wickremesinghe’e leadership as those who had been rejected by the people were behind him.

Dr. Godahewa was referring to the SLPP engineering Wickremesinghe victory at the July 20 presidential contest. Dr. Godahewa backed Dullas Alahapperuma, who obtained 82 votes whereas Wickremesinghe polled 134. The group that voted for Wickremesinghe largely backed the imposition of emergency with 120 voting for and 63 against in the 225 member parliament.

MP Godahewa said that the country could overcome the daunting economic challenges. The MP said that he was not sure whether the incumbent Cabinet-of-Ministers had the capacity and the commitment to implement what was agreed during consultations among political parties in the run-up to Wickremesinghe election as the President. Whatever the developments, now that Wickremesinghe has been installed as the President, the new administration should be given the time and the space to address the issues, he said.

Lawmaker Godahewa strongly censured the electorate for habitually electing the same corrupt lot though they always demanded what he called a system change. The MP warned the electorate that there was absolutely no point in demanding ‘a system change’ if they exercised their franchise for those who ruined the country.

Declaring that there could be fresh protests similar to the massive public eruption on July 09 in Colombo, Dr. Godahewa urged the electorate to correctly identify those responsible.

Former Finance Minister Ali Sabry, PC, appearing on Swarnavahini in early June named the then President’s economic advisor (Dr. PBJ), Governors of the Central Bank (Prof. W.D. Lakshman and Ajith Nivard Cabraal) and the Treasury Secretary (S.R. Attygalle) as the culprits.

Dr. Godahewa said that the government required as much as USD 5-6 bn annually to settle loans amounting to USD 24.7 bn taken between 2004 and 2019. The MP emphasized the urgent need to examine the utilization of these funds, particularly unproductive investments made over the years. The former private sector top executive questioned whether a part of foreign loans obtained at exorbitant rates had been robbed.

The lawmaker said today the public had forgotten the Treasury bond scams that had been perpetrated in Feb 2015 and March 2016, finalization of 99-year- leasing of the Hambantota port to China in 2017 at terms utterly disadvantageous to Sri Lanka, sharp drop in economic development from 5.5% to 2.1% and depreciation of the Rupee by 40 percent during yahapalana administration. At the time, Gotabaya Rajapaksa won the presidency in late Nov 2019, the country had USD 7.6 bn in reserves sufficient to meet the import bill for a couple months, Dr. Godahewa said.

Referring to a recent controversial public declaration made by Public Administration Secretary Priyantha Mayadunne, Dr. Godahewa said that those who had recklessly expanded the public sector at the expense of the overall financial stability, too, should accept the responsibility for the current crisis.

The MP pointed out that there had been approximately 500,000 public sector employees in 2004 but over the years the total increased to a staggering 1,402,000. Dr. Godahewa cited the 2021 figures to highlight the crisis. Of Rs 1,238 bn tax revenue, Rs 1,115 bn or 90 percent of the total had been spent on public sector salaries and pensions.

Stressing the extreme difficulty in raising USD 500 mn required for fuel imports, particularly for power generation, Dr. Godahewa alleged that those who deliberately delayed power generation projects, too, should accept the blame for Sri Lanka’s current predicament.

Dr. Godahewa queried how the sudden introduction of mandatory use of carbonic fertilizer without a proper study ruined the agriculture sector. Those who decided on the agriculture policy as well as proponents of that move, too, should be held responsible for the overwhelming crisis.

Much touted projects to send trained personnel abroad and expansion of the information technology sector couldn’t achieve desired results as those entrusted with the said tasks failed, the former minister said.

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UNDP: Rs 600 bn tax cut a huge mistake



Director of the Sustainable Finance Hub of the UNDP Marcos Neto has called the decision to do away with a range of taxes here a fundamental mistake committed by Sri Lanka.The comment was made at the Parliament complex during an interactive dialogue on ‘Revenue Generation as a Pathway to Sri Lanka’s Economic Recovery’ on Tuesday (09). It was organised on a request by Anura Priyadarshana Yapa, former Chairman of the Committee on Public Finance to the United Nations Development Programme (UNDP).

The Opposition as well as several other parties alleged that the government had lost as much as Rs 600 bn due to the controversial decision to do away with a range of taxes including PAYE, NBT (Nation Building Tax), Withholding tax, Capital Gain tax imposed on the Colombo Stock Exchange, Bank Debit tax and unprecedented reduction of VAT (Value Added Tax). The 15% VAT and the 2% NBT which amounted to 17% imposed on all goods and services were unified and reduced to 8%, effective from the first of December 2019.

The decision was taken at the first Cabinet meeting of the Gotabaya Rajapaksa government on 27 Nov. 2019.Governor of the Central Bank Dr. Nandalal Weerasinghe is on record as having said that the powers that be ignored the IMF warning not to do so and also the immediate need to restructure Sri Lanka’s debt (SF)

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Debate on power tariff hike on 29 Aug.



Party leaders have decided to debate the electricity tariff hikes in parliament on 29 August.The date was fixed for the debate following a request by the main opposition SJB.The debate will be held from 9.30 am to 4.30 pm on 29 August.

Chief Opposition Whip Kandy District MP Lakshman Kiriella told Parliament on Wednesday (10) that as per the proposed tariff hike the monthly electricity bill of domestic consumers would increase by 75 percent to 125 percent. “This is unbearable. This is like sending the people to an electric chair while they are struggling to make ends meet amidst a massive increase in cost of living.

How does this government expect people would be able to pay such an exorbitant price for electricity? We demand a debate in parliament before this proposed tariff hike is implemented,” Kiriella said.

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British national to be deported



By Rathindra Kuruwita

The Department of Immigration and Emigration has ordered Kayleigh Fraser, a British national whose passport has been taken into custody after she posted on social media anti-government protests, for violating her visa conditions, to leave the country by 15 August. The Department has already cancelled her visa.

Earlier this month Immigration and Emigration officials visited Fraser at her home and took her passport into custody. The Department said Fraser had been in Sri Lanka for medical reasons since 2019. She had returned home several times, it said.

The Immigration and Emigration officers told her to visit them within the next seven days.Fraser on 02 August said that a group of immigration officers had visited her and asked for her travel document. She said that officials told her that they would return her passport when she visited the Department of Immigration and Emigration.

Fraser added that she had received an anonymous call asking her to leave Sri Lanka as soon as possible before facing ‘big problems.’ Immigration officials visited her house a few days after the call.

Fraser has shared a number of photographs and videos from the ‘Gota Go Gama’ site. Human Rights groups and activists have accused the Sri Lankan government of using Emergency regulations to harass and arbitrarily detain activists seeking political reform and accountability for the country’s economic crisis.

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