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Editorial

Income tax

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It is very clear at present that the new income tax net cast by the Ranil Wickremesinghe government has provoked a situation that may well become unmanageable and ominous signs of this are clearly emerging. Strident protests from groups including doctors, university academics and others including port and airport employees and many others have been becoming increasingly strident over the past several days. Hints of direct trade union action, obviously meaning strikes, have been made. Whether a government, already on the back foot following Inter University Students’ Federation (IUSF) Convenor Vasantha Mudalige’s release on bail and angry public opinion railing against blatant efforts to postpone the scheduled local elections. can fend off the tax protests remains to be seen.

All those protesting on this account well know that the government is desperately cash strapped and needs to urgently harness revenue to keep the wheels of state turning. On its part, the government also is too well aware of the inability of most of the protesters to bear the new income tax burden in the face of galloping inflation, particularly food, electricity and a host of other goods and services are concerned. But there is very little that it can do about it. Wickremesinghe’s and his government’s obdurate refusal to abandon or cut down on Saturday’s 75th Independence anniversary bash, said to have cost Rs. 200 million, has only aggravated public fury about the new income tax burden placed upon the people.

The very small number of personal income tax payers in this country have always felt unfairly treated, believing they have been singled out for harsh treatment while the vast majority remained untouched. They could not be more wrong. All the people of the country pay taxes and how! As one famous newspaper editor of the past pungently put it, “every time you strike a match or flush the toilet, you are paying a tax.” We all know the platitude that the only thing that is certain in life is death and taxes. Indirect taxes unlike those that are direct (like income tax) by far account for the lion’s share of tax revenue. Populations of developed countries, particularly in Europe and North America, pay high income taxes. But they, unlike us in Sri Lanka, get good returns for what they pay. We, in this land like no other, can only grin cynically when we see signs proclaiming “Your tax rupees at work” at road digs and construction sites and think “like hell” to ourselves.

Equity is a basic principle of taxation long ignored in this country. Go back to 1977 and the early years of opening our long shackled economy by the J.R. Jayewardene government with Ronnie de Mel as finance minister. That was when public service emoluments were freed of income tax on the argument that top public servants were paid much less than their private sector counterparts and this hindered government’s ability to hold competent managers in the public sector hierarchy. The contention was not altogether without merit but there were many fallacies as well. Public servants from the colonial days have enjoyed non-contributory pensions which is not the case (with very few exceptions) in the private sector. Dr. N.M. Perera, as finance minister in Mrs. Bandaranaike’s United Front government of 1970 tried, without success, to withdraw the pension benefits from new entrants to the public service. He sensibly proposed that they be paid a retirement benefit like what is offered by the EPF to private sector employees with contributions from both employer and employee. The failure of this effort has left a ticking time bomb on the taxpayer’s lap to this day.

At a post-budget press conference following freeing public sector salaries from income tax, then Finance Minister De Mel was asked whether parliamentary emoluments too would be similarly exempted. He ducked the question saying “that hasn’t been decided yet.” Of course the benefit was extended to MPs too. Cabinet Spokesman Bandula Gunawardene told a post-cabinet news briefing a few days ago said that the IMF wanted all those earning Rs. 45,000 a month to be made liable to income tax. The government tried its best to push it to a monthly Rs. 150,000 and finally settled at Rs. 100,000. There were those who didn’t believe the minister on the premise that an institution like the IMF would not have got into micro details but would have broadly prescribed a percentage of GDP that must be gathered as tax revenue. However it wasn’t long before the president himself confirmed Gunawardene’s claim.

There’s no avoiding the reality that Sri Lanka’s income tax base is far too narrow and needs to be widened substantially. This would mean that people who have never paid income tax would caught up in the tax net and would deeply resent being compelled to pay. This is particularly so in the context of the value of money reducing sharply, most so in recent months. The country is also saddled with an Inland Revenue Department entrenched in a tradition of harassing already squeezed lemons to increase tax collection in a society where evasion is widely prevalent, often among professionals who should know better. The government must also be cognizant of the untaxed, lavish non-cash benefits of politicians deeply resented by the people. However that be, whether the government will be allowed to implement the announced scheme or be compelled to backpedal remains to be seen.



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Editorial

Greed for diplomatic appointments

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In early November this year, following the appointment of a new president, many headlines were grabbed by news of the recall to Colombo of 16 heads of Sri Lankan missions overseas including ambassadors and high commissioners appointed outside the professional service for political and other reasons totally unrelated to the national interest. Among them were two high commissioners to India and Australia, who were retired members of the Sri Lanka Overseas Service reappointed on contract to head our missions in New Delhi and Canberra. Sensibly, the present high commissioner in Delhi would continue there until the president’s forthcoming visit to India in December is concluded. It has been reported that the performance of the recalled diplomats, including some former armed services commanders, would be evaluated and whether some of them will be reappointed remains to be seen though some sources regard this as unlikely.

Unfortunately many appointments to the diplomatic service post-independence have been political or for reasons of patronage. In the early years, people like Mr. GCS Corea (later Sir. Claude), Mr. RSS Gunawardene (Later Sir. Senerath), Sir. Oliver Goonetilleke, Sir. Edwin Wijeyaratne, Sir Susantha de Fonseka and labour leader AE Goonasinha were among those appointed to the newly minted diplomatic service from the body politic after then Ceylon obtained her independence from Britain. Before independence, Mr. DB Jayatillake (later Sir. Baron) went to India as the Ceylon Government Agent and died en route home to Colombo. These were were undoubtedly men of high achievement and few, if any, would have begrudged them their appointments. With no professional Overseas or Foreign Service in the early days of independent nationhood, members of the then Ceylon Civil Service (CCS) were sent to help man the few overseas missions that the country then had.

In October 1949, the year after independence, the Ceylon Overseas Service (COS) was set up and the first batch of cadets were recruited. This was on the basis of the CCS examination and a few of those ranked lower than those absorbed into CCS were recruited to the COS. In later years, in economic terms, many who served abroad for their country as members of the COS, did better than civil servants in the higher bureaucracy due to perquisites they enjoyed like bringing back duty free vehicles when they returned for home posting as well as the various overseas allowances paid to them in foreign currency. Import and foreign exchange restrictions enforced in later years made overseas postings doubly and trebley attractive; and many were the patronage appointments granted in the country’s missions abroad to wives and children of senior politicians and other kith and kin. These cost the taxpayer dearly as the returns were personal to those appointed and were of no benefit to the country.

Apart from bad appointments made to our overseas missions, their sheer number for a country of Sri Lanka’s size and resources is truly mind boggling. According to official data, we now have 35 embassies overseas plus a dozen high commissions (missions in fellow commonwealth countries), two permanent representatives to the United Nations in New York and Geneva, 10 consulates-general, one deputy high commission (in Chennai) and one representative office in Palestine. Our diplomatic presence in countries like the Seychelles defies explanation with a former president’s close kinsman appointed ambassador. Branches of the Bank of Ceylon and the Sri Lanka Insurance Corporations too have been opened in that country for which an affection of the highest in the land is clearly apparent.

The public, however, is in the dark on whether these institutions are earning their keep leave alone operating profitably. The Right To Information law now operative and used both by journalists and public interest activists should be invoked for the public benefit from news in this regard.

Quite apart from that, a forensic review of the cost benefit aspects of the country’s overseas missions is long overdue. A feeble attempt was made about three years ago with then foreign ministry announcing in 2021 that the Sri Lanka consulate in Frankfurt, the high commission in Nigeria and the consulate in Cyprus were to be closed down. Then foreign minister GL Peiris is on record saying that operations in Frankfurt would be moved to Berlin and that under then circumstances the mission in Nigeria could not continue. The closing of these missions were part of a much needed cost cutting exercise. But earlier this year it was announced that Sri Lanka was looking to open its first diplomatic office in Central Asia with a diplomatic presence in Astana in Kazhakstan.

Some of the countries where Sri Lanka have resident diplomatic missions do not have a reciprocal presence here. Very many of the foreign ambassadors accredited to Colombo are resident in New Delhi and are concurrently accredited to Sri Lanka. This is something that we too do in some parts of the world where ambassadors posted to some important capitals are concurrently accredited to less important neighbouring countries. Undoubtedly, a presence in countries in the Middle East and elsewhere hosting a large number of Lankan workers is necessary but a consular presence rather than a fully-fledged mission in such countries may be in order.

What is unfortunate is that there is a greed for foreign diplomatic posting and too often political influence and patronage results in rank bad appointments. Sad but true, a close kinsman of President Mahinda Rajapaksa appointed ambassador to Washington and found to have made money on a property transaction (which he subsequently returned) was proposed to be high commissioner in Canada despite the then president reportedly saying “this fellow has rubbed soot on my face!” Fortunately Ottawa refused to have him.

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Editorial

Technology and human judgement

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Saturday 30th November, 2024

A tragic incident where a car, reportedly guided by Google Maps, plunged off a bridge under construction, killing three persons in India has sparked a debate on whether online navigation apps should be held responsible for such mishaps. There are arguments for and against the culpability of the providers of online navigation services in respect of incidents of that nature, which however are rare.

The above-mentioned accident and the debate thereon are of much relevance to Sri Lankans, many of whom use Google Maps, daily. Those who are engaged in food delivery, e-commerce, ride-hailing transport, etc., cannot do without online navigation. Gone are the days when directions were given verbally; anyone who cannot provide or follow ‘locations’ online is considered a dinosaur, today. Most people across the globe cannot think of a day without Google Maps and other such online navigation platforms.

BBC informs us that Google Maps caters to around 60 million active users and witnesses about 50 million searches a day. The exact number of navigation apps in the world is not known, but it is believed that there are hundreds of them including the ones without a global reach as such.

Incidents like the one reported from India have brought into focus legal and accountability issues concerning net-based navigation services, and the inadvisability of one’s overdependence on technology in activities, such as driving, where human judgement has a vital role to play.

The blame for the traffic accident in India should go to errant road development and local government authorities more than anyone else because the unfinished bridge had not been barricaded. Media reports say the residents of the area avoided that deathtrap because they were aware that the bridge was still under construction. So, it is possible that any outsider would have driven over the unfinished bridge with or without Google aid and plunged to death.

Ideally, navigation apps should be able to provide real-time updates about road conditions accurately, but it is not possible due to their resource constraints, practical difficulties and cost factors. Hence, those who use them do so at their own risk, and should use their judgement and exercise caution, without following online directions blindly.

Whether Google Guru will be put in the dock over the three tragic deaths in India remains to be seen. Public officials and their political masters in this part of the world are known for their adeptness at scapegoating others for their lapses and blunders. So, no one should be surprised even if those who did not care to close the unfinished bridge in India get off scot-free by blaming Google.

However, the lesson that the mishap in question provides should not go unlearnt in this technologically-driven world; it is always advisable to use one’s own judgement without leaving one’s safety entire to Google or any other digital deity, as it were.

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Editorial

Racketeers and collaborators

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Friday 29th November, 2024

It is a supreme irony that some unredeemable characters who, intoxicated with power, sought to summon even Supreme Court judges to Parliament, during the Rajapaksa-Wickremesinghe regime, are now visiting the CID headquarters meekly. They no longer bark at journalists or bellow rhetoric. One hopes that the present-day rulers will learn from their predecessors’ predicament, and act responsibly.

The CID continues to question those who served as ministers in the SLPP-UNP government on Cabinet approval granted for proposals submitted by the then Health Minister Keheliya Rambukwella for procuring medicinal drugs, etc., which were later found to be substandard. Former Minister Bandula Gunawardena, on his way to the CID headquarters, yesterday, told reporters that it was the first time he was going to make a statement to the CID over a Cabinet decision. Some politicians seem to think Cabinet decisions are not liable to legal scrutiny.

Opinion may be divided on whether former ministers could be questioned over what they did at Cabinet meetings, and on the manner in which the CID has chosen to handle the issue of corrupt procurement deals under previous governments, but the fact remains that all those who authorised the Health Ministry to purchase poor-quality and fake medicinal drugs, etc., thereby endangering the lives of patients and enabling politicians and officials to line their pockets, cannot absolve themselves of the responsibility for those procurement rackets. Most of all, the Cabinet of Ministers must not be allowed to place itself above the law. The SLPP-UNP Cabinet became a metaphor for corruption, and all allegations against its members must be investigated thoroughly.

All those who, as members of the SLPP-UNP Cabinet, committed the grave sin of approving the cancer drug racket, either wittingly or unwittingly, must be ashamed of themselves. They make a public display of their religiosity while indulging in corrupt practices; they do not seem to worry about the prospects of torments in hell for their sinful actions.

In 2023, the then President Ranil Wickremesinghe had the chutzpah to dare the Opposition to oust Rambukwella as the Health Minister thorough a no-faith motion; he was fully confident that the SLPP-UNP combine had enough numbers to scuttle such a move in Parliament. As many as 113 SLPP MPs opposed a motion of no confidence the Opposition moved against Rambukwella for the procurement of substandard medical and surgical supplies. They did so despite the availability of irrefutable evidence that the Health Ministry on Rambukwella’s watch had purchased a consignment of fake immunoglobulin and endangered the lives of cancer patients. Only 73 MPs voted for the no-faith motion, which was defeated by a majority of 40 votes.

Wickremesinghe and the SLPP leaders would have opened an escape route for Rambukwella but for pressure from the Opposition, the media and civil society organisations on them to allow him to be legally dealt with. It was obvious that the Rajapaksa-Wickremesinghe government was oblivious to reality and digging its political grave.

Wickremesinghe suffered a humiliating defeat in the September presidential election. Most of the shameless MPs who defended Rambukwella either lacked courage to contest the recent general election or failed to get re-elected. Unfortunately, a handful of them have been able to re-enter Parliament and pollute it. They, too, must be made to pay for their sins.

The CID should question former President Wickremesinghe and former Prime Minister Dinesh Gunawardena as well on the cancer drug racket, which shook the conscience of the nation.

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