Connect with us

Editorial

Long haul ahead

Published

on

In this hi-tech era nobody will dispute the fact that computers eliminate manual drudgery, doing in seconds, or nanoseconds what humans would take hours, days, weeks and even months to perform. It is therefore no cause for surprise that the Inland Revenue Department (IRD), responsible for collecting a large share of state revenue, decided to computerize. Better late than never, it can be said. The tax authorities some years ago bought an expensive Revenue Administration Management Information System (RAMIS) which was touted as something that would revolutionize tax administration in the country. It has been used since the beginning of 2017 and according to tax officials has proved more efficient than manual handling. Maybe so, but numerous problems have arisen as a result of the new system. Many taxpayers and accountancy firms handling tax matters for clients hold a different view on RAMIS performance and are constantly complaining of harassment and innumerable difficulties arising in their dealings with IRD post-RAMIS.

However that be, it has been revealed at the Committee on Public Accounts (COPA) an oversight body of the legislature, that though over a massive three billion rupees had been paid to a Singaporean company that developed the system, each time an amendment to the tax law is made – and these are frequent – a further four billion must be coughed out to incorporate it in the system. We do not know how much additional expenditure has been incurred in this regard since the system was first purchased and commissioned. The sensible suggestion has been made by a member of COPA that an agreement must be reached with the supplier/developer of the system on a one off payment basis for incorporating amendments to the tax law into RAMIS. That, of course, is commonsense. But whether such an agreement will be possible is something that remains to be seen. Selling a product cheap and thereafter making your money on essential spares and maintenance is not an uncommon business practice. Whoever was responsible for the purchase of the system, and there would have been many involved in such a costly procurement, should have foreseen the necessity of amendments to the tax law having to be accommodated in RAMIS and provided for this initially.

Treasury and Finance Secretary R.S. Attygalle has told COPA that a five-year, consistent tax policy has been proposed (promised?) in the 2021 budget. This would be a convenience for both taxpayers and tax collectors, he has said. Similar promises of a consistent tax policy have been made in the past too, but delivery has been painfully slow. According to data presented to COPA, 532 of the country’s 2,192 big taxpayers account for 70.2 percent of tax revenues. Collection from cash cows such as the highly taxed alcohol and tobacco industries will be relatively easy. But not so from the illicit liquor segment supplying much of the booze consumed nationally. Whether the bookies and casino operators pay their proper taxes are also matters that must be determined. It is very well known that tax evasion is rampant in the country and IRD’s performance in rounding up such evaders has been less than satisfactory with increased collections usually coming from existing files. There have been complaints over the years that the practice of trying to squeeze already squeezed lemons continues to be common practice at the tax office. While fictitious returns and attempted tax frauds cannot be condoned and must be diligently pursued, the taxman should be considerate to honest taxpayers and not load them with unnecessary queries and paperwork.

We run a story from our parliamentary reporter today about a Rs. 1.3 trillion deficit in the government’s tax revenue in 2018. This is before the Easter bomb or the Covid pandemic which necessarily impacted on State revenue. The situation must necessarily be worse since then. Officials have attributed much of the shortfall to many state institutions defaulting on their tax obligations. This is often because they are not in a position to make these payments according to independent assessments, COPA has been told. A full report on such institutions has been called for but whether this will yield the desired result is doubtful. The tax man can force a defaulting company into liquidation but not so government bodies. Apart from not meeting tax obligations, state undertakings are guilty of routinely failing in paying their suppliers. Thus there is a running debt most of the time from SriLankan Airlines to the Ceylon Petroleum Corporation which usually carries massive overdues from bodies such as the CEB. While an ordinary householder falling back on paying his domestic electricity or water bill risks disconnection, not so government institutions.

The Covid induced economic downturn will remain with us for a long time despite the many sunshine stories commonly spun on quick recovery. We are given different time frames by various concerned authorities on when such recovery is to be expected. But none of them are in a position to accurately predict when the pandemic will be brought under control. Even when that happy day dawns, return to normalcy will be hard and painful. Some businesses are limping on, but there are many others unable to do so. The government will have to live with the reality of revenue shortfall for a long time to come. If 2018 was as bad as has been stated, 2019 and 2020 must be necessarily worse. In such a context there must be a conscious effort in cutting the often profligate expenditure of state institutions. This something yet to be seen.



Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Editorial

Get down to brass tacks

Published

on

Saturday 13th August, 2022

The government’s high-octane performance is really amazing although the Opposition has accused it of doing nothing by way of problem solving. It has already solved many problems since the appointment of the new President and the new Cabinet, and is in the process of tackling many others.

The UNP has overcome many problems, thanks to the current dispensation. It has come in from the cold, at last. It was in penury following its disastrous electoral loss in 2020, but is showing signs of recovery. Some of its seniors who were in hiding after defaulting on bank loans to the tune of billions of rupees have crawled out of the woodwork. Their problems, too, have been solved.

 The SLPP also had numerous problems; it faced the prospect of being ousted. But the government has solved all of them. The Rajapaksa family is out of danger; it is calling the shots in the government, again. The SLPP MPs who fell out with their party bosses, and were sidelined, are back in the Cabinet.

Some ambitious Opposition politicians have realised their dream of becoming ministers. Having crossed over to the government, they no longer have any problems to contend with, and can now make up for lost time to their heart’s content. Many more ministerial posts are expected to be created when the 22nd Amendment Bill with provision for the appointment of a jumbo Cabinet is steamrollered through Parliament, and the problems that most MPs are facing will be solved in the event of a national government being formed. At this rate, all the problems of the UNP, the SLPP and others who are willing to switch their allegiance to the government will be solved once and for all.

But the problems that the people are beset with remain unsolved, nay they are worsening. There’s the rub. The foreign currency crunch continues, and precious little is being done to ensure a steady forex inflow, which is the be-all and end-all of economic recovery. The fuel crisis is far from resolved; rationing is no solution however efficient it may be. The economy is thirsting for oil. Extremely high petroleum prices have led to an increase in production costs and the prices of essential goods and services. Inflation is soaring. Bread now costs as much as cake did about two years ago. People continue to skip meals. Doctors are complaining of drug shortages in the state-run hospitals. The school system is not fully functional yet due to transport issues. The Ceylon Electricity Board has jacked up electricity prices unconscionably, and the Water Board is expected to follow suit soon. Tax increases are said to be in the pipeline. Businesses are closing down due to escalating production costs and for want of imported raw materials. Many people have lost their jobs. The situation is bound to take a turn for the worse when the adverse effects of the conditions for the IMF bailout packages kick in. The government does not seem keen to address these issues. The Opposition is all at sea.

The government and the Opposition have been busy talking instead of making a collective effort to pull the country out of the present economic mire. They are blowing hot and cold on the formation of an all-party government, which has come to mean different things to different people. The Opposition insists that the proposed joint administration should be an interim one, but the SLPP has some other plans; it wants to cling on to power by sharing ministerial posts with the Opposition. If President Ranil Wickremesinghe, the SLPP and the Opposition are serious about joining forces for the sake of the country, they ought to stop wasting any more time on endless talks, get down to brass tacks, set goals and formulate a definitive plan to reach them in the shortest possible time.

Continue Reading

Editorial

Aragalaya goes home

Published

on

The goal of the Galle Face protest or the Aragalaya was to send the Rajapaksas home. On 09 May, Prime Minister Mahinda Rajapaksa went home. On 09 June, Basil Rajapaksa went home, and on 09 July President Gotabaya Rajapaksa agreed to go home. On 09 August, the Aragalaya went home, as cynics say! The incumbent government, which is a Rajapaksa regime in all but name, is cock-a-hoop, thinking that its strongarm tactics have helped bring public protests under control; it is now reverting to old ways.

The fact that the JVP, the Frontline Socialist Party (FSP), and their allies and sympathisers including former Army Commander Field Marshal Sarath Fonseka failed to bring large crowds to Colombo on 09 August for the ‘final battle’ has given the lie to their claim that they deserve the credit for the success of the 09 July uprising, which led to the ouster of President Rajapaksa. If it is true that they were instrumental in bringing so many people for the march on the President’s House, will they explain why they miserably failed on 09 August?

Similarly, the failure of the ‘final battle’ launched by the JVP, FSP and others has disproved the government’s claim that all those who took part in the previous protests are anarchists sympathetic to some ultra-radical political groups, and therefore the use of military force against them is justifiable. Now, it has become clear that most protesters who thronged the city on 09 July were resentful people, and some organised groups with hidden political agendas used public anger to compass their political ends. Hence the need to separate the irate public from troublemakers, and resolve the issues that make the ordinary public take to the streets.

The Galle Face protest movement started off as an agitation similar to the ‘Occupy Wall Street’ protest in the US, and was leaderless at the beginning; one may recall that the JVP, which had no control over the protest initially, warned that such an uprising would spell disaster for democracy. Thereafter, the JVP, the FSP, etc., gained control of the Aragalaya systematically. The UNP also had a considerable presence at the protest site, as former UNP MP Ashu Marasinghe has admitted. The protest gathered momentum with thousands of angry people, mostly youth, joining it, and some businesses and expatriate Sri Lankans providing assistance; most well-wishers of the protesters remained anonymous. There appeared signs of the Galle Face protest losing steam in early May, but the SLPP goons carried out a savage attack on it, giving it a new lease of life and triggering a wave of retaliatory violence, which was carried out in a systematic manner; organised arson attacks and other crimes were similar to the ones carried out in the late 1980s.

Perhaps, the Galle Face protest would not have snowballed into a mass uprising, much less led to the ouster of President Rajapaksa, but for the aggravation of the economic woes of the public. Oil and gas supplies came to a halt, and inflation continued to gallop, driving the people to protest.

When Ranil Wickremesinghe became the President, fuel and LP gas supplies resumed all of a sudden, and an effort to form an all-party government got underway, infusing the public with some hope. People have chosen to act with restraint, as a result. This, we believe, is the reason why the 09 August protest flopped. But, worryingly, the promised political change as well as economic relief remains a will-o’-the-wisp, and if the government fails to maintain a continuous fuel supply, bring down the cost of living, and form an interim, all-party government, pressure is bound to build up in the polity again and find expression in mass uprisings despite the ongoing hunt for the self-proclaimed protest leaders. Rulers are always left without any defence when a tsunami of public anger makes landfall.

Another ruse

The government has made the mistake of causing an affront to the intelligence of the people who are calling for a radical political change and tangible economic relief. Instead of trying to live up to their expectations, it is planning to appoint a jumbo Cabinet and lure Opposition MPs into joining it so as to retain its hold on power until the expiration of the current parliamentary term.

One of the main criticisms that Ranil Wickremesinghe, Maithripala Sirisena and their Yahapalana allies levelled against the Rajapaksa government ahead of the 2015 presidential election was that it maintained a massive Cabinet at the expense of the public to engineer crossovers. They introduced the 19th Amendment, limiting the number of Cabinet members to 30 and that of other ministers to 40, but made a mockery of their bona fides by craftily inserting a section to remove that limit in case of the formation of a national government. Dissident SLPP MP Gevindu Kumaratunga has told Parliament that the original 22nd Amendment Bill unveiled by the government initially did not contain any provision for expanding the Cabinet, but it has been smuggled into the Bill submitted on Wednesday! Thus, the government has unwittingly shown its hand. The people will be burdened with a jumbo Cabinet, again!

The Rajapaksa-Wickremesinghe administration is apparently labouring under the delusion that it could cling on to power with the help of crossovers, and coercion will help overcome anti-government protests. Unfortunately, it has, in its wisdom, chosen to test the people’s patience again and is playing with fire, instead of making a serious effort to defuse tensions in the polity by eliminating the causes of public discontent, and making life less miserable for the ordinary public.

Continue Reading

Editorial

Gallup polls and G-strings

Published

on

Thursday 11th August 2022

The results of an opinion survey, released recently, indicate that JVP leader Anura Kumara Dissanayake is leading where the public approval ratings of the candidates who vied for the presidency in Parliament last month are concerned. Dissanayake leads the survey on trust in leaders to do the right thing to resolve the economic crisis, with 48.5%, followed by Ranil Wickremesinghe (36.6%), Opposition leader Sajith Premadasa (29.1%) and Dullas Alahapperuma (23.7%).

The outcome of the aforesaid opinion poll is likely to make the JVP believe that it stands a better chance of shoring up its image and improving its electoral performance if it remains independent of the grand alliance thought to be in the making, and acts as the Opposition. If all other parties represented in Parliament join forces with the SLPP to form a unity government officially, then the post of the Opposition Leader will have to go to the JVP; that is the basis on which TNA leader R. Sampanthan became the Opposition Leader in 2015.

However, it is not advisable for anyone to go solely by opinion/polls survey results in making vital decisions, for public opinion could be as elusive as the weather; forecasts thereof could go wrong, and some politicians who disregard this fact have found themselves up the creek without a paddle. What befell Keith James Locke, a New Zealand Green Party member, may serve as an example. In the run-up to the 2005 election, he was so confident of victory in his electorate because of Gallup polls predictions favourable to him that he undertook to run across Epsom, in the buff, if his rival won. Unfortunately for him, the pollsters’ predictions went wrong, and he lost! Under pressure from the media and his political rivals, he carried out his promise; he made a dash across the Auckland suburb, wearing a G-string with bodypainting depicting a full suit!

Even in the US, where pollsters employ advanced methods to gather data and analyse them, the Gallup polls results went wrong as regards the outcome of the 2016 presidential election. Polls forecasters confidently placed Hillary Clinton’s chance of winning at between 70% to 99%! But Donald Trump came from behind to beat her. It may be argued that Clinton won the popular vote, but the fact remains that Trump secured the presidency. Pollsters also failed to predict the outcome of the British general election in 2015.

One may recall that in Sri Lanka, too, something similar happened at the 2015 presidential election. All secret opinion surveys commissioned by the Mahinda Rajapaksa government ahead of that election predicted a landslide win for the sitting President, but his main rival, Maithripala Sirisena proved to be a dark horse. Rajapaksa did not know what hit him. Even Sirisena may not have expected to pull off such an upset victory.

Sri Lankan pollsters may be familiar with the idea of ‘shy Trumpers’, which came into being during the 2016 US presidential election; many Americans did not want to identify themselves as the supporters of Trump, during surveys, due to his undesirable behaviour but approved his policies and voted for him. Likewise, there may not be a dearth of ‘shy Rajapaksers’ in the Sri Lanka polity, and the beleaguered Family may be planning a comeback a la Bongbong Marcos of the Philippines. This may be the reason why they enabled two non-SLPP members, Wickremesinghe (UNP) and Dinesh Gunawardena (MEP) to secure the presidency and the premiership respectively and function as placeholders, while enjoying life, until the time is opportune for the Family members to crawl out of the woodwork.

President Wickremesinghe has likened his unenviable task to that of Grusha, who carries a baby across a collapsing rope bridge, in The Caucasian Chalk Circle. That, we believe, is an understatement of his daunting mission; he is carrying a much heavier burden—a full-grown, former ruggerite, who is the son of not just a former Governor but an ex-President, no less!

As for surveys and statistical analysis of public opinion, it behoves politicians to tread cautiously. Prudence demands that they keep an ear to the ground, and factor in all political developments and trends in making crucial decisions, instead of being carried away by survey results.

Continue Reading

Trending