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SJB warns of move to privatise highwaysax

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By Saman Indrajith

Giving state lands and projects to family members and relations was better than giving them to the Chinese, the SJB says.

SJB Kegalle District MP Kabir Hashim, opening the debate under the expenditure heads of the Ministry of Highways during the third reading debate on Budget 2021, said that the government was giving away state lands to Chinese investors.

“Isn’t handing over the lands to the Chinese on lease the first step towards privatisation? The decisions of the Highways Ministry are not taken by Minister Johnston Fernando or his Secretary R.W.R. Premasiri, but Secretary to the President, Dr P.B. Jayasundara.”

“Minister Johnston Fernando and his Secretary Premasiri are both talented persons. But their talent is not fully utilised. The Highways Ministry is very important. About one million people visit Colombo and 300,000 vehicles enter the city daily. Owing to traffic congestion, which leads to the waste of fuel and time we lose Rs. 1,000 million a day. Since I identified this problem we have launched several projects, including the New Kelani Bridge on pillars covering 2.5 km at a cost of Rs Rs. 40,000. The 9.5 km long outer circular highway connecting Kadawatha-Kerawalapitiya commenced after paying compensation to those who had lost lands to the project so the vehicles could now go from Mattala to Katunayake straight. We commenced a road on pillars from the Ingurukade junction via Chaithya Road to Galle Face.

“I think Minister Fernando is capable of continuing with the good work we initiated. Under the highways portfolio, there are 12,496 km. Some 34,000 km are under the Provincial Councils. There are 75,000 km of rural roads. Taken together there are roads measuring 120,000 km in the entire country. It is said that under your government all roads would be carpeted. This is something we have to wait and see. There are problems. All rural roads are under Minister Nimal Lanza. He has about 75,000 km under his purview. If we remove the roads under the Provincial Councils, the Minister Johnston will have only roads under the Road Development Authority and the Highways. There is a plan as per a Cabinet decision on Oct 12 to remove the Highways from Minister Johnston and be placed under a company headed by the Treasury Secretary. This is a joke. Both Secretary Premasiri and Minister Johnston Fernando are capable people. Then, why is this plan to set up a separate company? This is a plan with a hidden agenda. I table the Cabinet press briefing release. As per the press release the company to be set up would have the total responsibility of management of all highways. Although it is said that the said company is being set up under the Treasury, speculation is rife that a Singaporean company will be brought in and it will have 49 percent ownership and the Treasury 51 percent for 30 years. This is the first step towards privatising the highways. It is said that the lands coming under the Highways Ministry too would be given to them. What are those lands? The lands are those in and around Maradana, Beria Lake and the Manning Market. These will be finally given to the Chinese.

Prison Management and Prisoners Rehabilitation State Minister:

Lohan Ratwatte: You were the plantations minister once. Didn’t you give the lands of the Plantations Ministry to the kith and kin of yours?

MP Hashim:

It is better to give the lands to the family members and relatives than to the Chinese. Your government is giving state lands for 30 years to the Chinese.



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Heat Index at Caution level in Northern, North-Central, North-western and Eastern provinces and Monaragala and Hambanthota districts

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Heat index Advisory Issued by the Natural Hazards Early Warning Centre At 07.30 a.m. 28 May 2023, valid for 28 May 2023

Heat index, the temperature felt on the human body is expected to increase up to ‘Caution’ level at some places in Northern, North-Central, North-western and Eastern provinces and Monaragala and Hambanthota districts.

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GCE Ordinary Level examination commences on Monday (29)

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The General Certificate of Education (Ordinary Level) examination 2022 (2023) will commence on Monday (29).

472,553 candidates have applied to to sit this years examination which will be held at 3568 examination centers

The examination will conclude on 8th June 2023

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Personal income tax shock dims economic activities

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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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