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Military coup ends revival of democracy in Myanmar

The Lanka Sama Samaja Party (LSSP) and all the parties in the Socialist Alliance condemn the military coup, which has destroyed the recent attempt to restore democracy in Myanmar after nearly five decades of cruel military dictatorship.
In the General Election held last November, the National League for Democracy (NLD) scored a massive victory (winning over 80% of the seats) defeating the party put forward by the military. Ever since the election results were announced, the military alleged that the victory was a fraud, and this false campaign peeked last week when it declared that it could seize power to settle its claims of irregularities in the polls, according to the terms of the Constitution drafted by the military in 2008.
On February 1, the Myanmar military staged the coup detaining elected Leader and Nobel laureate Aung San Suu Kyi and taking control of the country for one year under a state of emergency. Suu Kyi and President Win Myint were detained in the capital Naypyidaw, NLD spokesperson Myo Nyunt said just hours before Parliament was to assemble for the first time since the election. This shameless violation of the people’s victory after nearly five decades of suffering under army terror and brutality came as a shock to the people.
Aung San Suu Kyi spent 20 years, on and off, under house arrest for her role as an opposition leader before she was released by the military in 2010. The country emerged from 49 years of military rule when elections were held in 2011. Despite the Aung San Suu Kyi party capturing 396 of 476 seats in the combined lower and upper houses of Parliament in the November polls, the military holds 25% of the total seats under the Constitution drafted by the military in 2008. This also includes several key ministries including that of Defense.
It is noteworthy that Myanmar has also seen two previous coups since independence from Britain in 1948, one in 1962 and the other in 1988. The powerful and ruthless military of Myanmar that has trampled on the people’s democracy since the country gained independence from Britain in 1948 has been able to trade and communicate with the rest of the world with very little condemnation by the so-called “International Community” (the Western powers led by the USA). This also applies to some extent to Myanmar’s neighbors.
However, with the developments of the last few days, it is gratifying to note that there has been strong condemnation by the UN Secretary General Antonio Guterres. Canada’s Ambassador to the United Nation has said, “The Constitution of 2008 was specifically designed to ensure military power was deeply entrenched and protected”. Other countries like the USA, Australia, India and Singapore have condemned the military action and called for the immediate release of the detained elected leaders and the early restoration of democracy.
We call upon the Government of Sri Lanka to join the rest of the world in strongly condemning the Myanmar military coup.
7Prof. Tissa Vitarana
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Personal income tax shock dims economic activities

ECONOMYNEXT –Sri 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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