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SL’s debt crisis has aggravated due to fear of taxing the super-rich says LSSP leader

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The fear of taxing the super rich has worsened Sri Lanka’s debt crisis, says SLPP MP Prof. Tissa Vitarana, leader of the Lanka Sama Samaja Party (LSSP).

Speaking in Parliament during the recent Vote on Account debate, Prof. Vitarana said he was glad that speakers from both sides of the House appeared, at least now, to accept that the country was faced with a severe economic crisis. This did not seem to be the case when promises were being made during the recent General Election campaign. But now when the money has to be found to fulfill the promises made, both sides of the House came out with the same solution, more and more loans, i.e. both local and foreign borrowing, the MP said.

“This is inadvisable as it would deepen the debt crisis facing the country and the people”, he cautioned.

Now, and in the November Budget, Prof. Vitarana called for a different approach to obtain the money the country requires. Wasteful expenditure, both local and foreign, should be minimized. In order to cut Sri Lanka’s foreign debt, instead of increasing it, strict import restriction together with increased export earnings is essential to achieve a positive trade balance. But the latter would take time as it requires proper planning, full mobilization of all the required resources and firm committed action based on science and technology by the government.

As the former Minister of Science and Technology, having established 263 Vidatha resource centres at divisional level across the country and helped to produce over 12,300 micro, small and medium entrepreneurs (17 exporters and 64 suppliers to the food chains and 57 to hotels – refer IPS report), Prof. Vitarana said that he would have liked to make a contribution when the country is facing a difficult time. However, it would appear that there are more capable people available.

“I wish them all success in the national interest. In the interim, less reliable short-term funding solutions, like tourism and repatriated incomes are being promoted, but alas they too have fallen and will take time to revive in the context of the deepening global crisis of capitalism aggravated by Covid-19”, he noted.

Internally, as the Treasury is averse to deficit financing, taking money from the Central Bank, for fear of inflation etc., other ways have to be found to increase government revenue. Rather than taking more loans and getting deeper into debt, Prof. Vitarana suggested that the government should raise the required money by increasing the tax on the super-rich. This was the way out of the debt crisis for the country and the government and the next logical step now that the government has returned to the correct policy of developing the national economy by reducing, and where possible banning, the import of foreign goods.

This was done when Dr. N. M. Perera was the Finance Minister in the SLFP/LSSP/CP Coalition Government led by Mrs. Sirimavo Bandaranaike after it came to power in 1970, the MP recalled.

In Sri Lanka, the upper limit of direct taxation on individuals, mainly the super-rich is one of the lowest in the world, a mere 18%, while the average in Europe is around 45%. In some Scandinavian countries that provide their citizens with a welfare state, the money required is obtained through a higher direct tax with an upper limit of about 60%, which targets the super-rich, he said.

When faced with the severe triple crisis (debt, oil and food) Dr. N. M. Perera as the then Finance Minister in 1970 enabled the country, when faced with a severe global food scarcity, to avoid the deaths of thousands due to starvation, unlike in most other Third World countries, by raising the upper limit of direct taxation to 75%. The funds generated enabled him to provide a measure of rice free and all essentials at low prices through the excellent cooperative outlets, Prof. Vitarana further said.

He was able to not only to balance the Budget but also to produce a budget surplus. This enabled him to cut foreign loans and get the country out of the debt trap. Not only was the foreign debt reduced to the lowest level in the country’s history, he also achieved the economic stability that was required for development, Prof. Vitarana further recalled.

The IMF promotes indirect taxation, like VAT, as the main source of government revenue and in the recent past, 87% of tax revenue was obtained this way. Only 13% was obtained through indirect taxation, and as the upper limit was lowered to 18%, the class of the super-rich (a mere 1% who some estimate as having 30% of the total personal wealth in the country) were practically unaffected and did not contribute their share to the burden, he said.

At this time of crisis, Prof. Vitarana proposed that the government should increase the upper limit of direct taxation to 70% so that while the required funds are obtained, the import of luxuries and non-essentials would drop. It would also narrow the huge gap between the super-rich and the poor, which not only has a bad psychological demonstration affect, but also leads to more crime and social instability. Globally economists have warned of this danger, he added.

 

 

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EC member Hoole moves SC against 20A

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Petitions challenging 20A before five-judge bench of SC today 

By Chitra Weerarathne

Petitions filed in the Supreme Court, challenging the constitutionality of the proposed 20th Amendment to the Constitution of Sri Lanka, will be called before a five-judge bench today.

These petitions have said that people’s approval at a referendum as well as a two-thirds majority in Parliament will be needed to enact the Bill.

All the petitions have basically said that the Bill has a section, which says a dual citizen can contest to enter the Parliament of Sri Lanka and run for President threatened national security.

The petitions challenge the powers vested in the President. The President could sack the Prime Minister and the Ministers. Once the Bill becomes law, fundamental rights petitions could not be filed to challenge an act of the President, the petitions have pointed out.

The investigating powers of the Auditor General have been curtailed. The powers vested in the Elections Commission when an election is on is also limited, the petitioners have argued.

The petitions have requested the Supreme Court to declare that a two-thirds majority in Parliament and people’s approval at a referendum will be needed to enact the proposed amendment.

Among the petitioners are Elections Commission member Ratnajeevan Hoole, the Samagi Jana Balavegaya, Attorney-at-Law Indika Gallage, Mayantha Dissanayake, S. J. B. Member of Parliament for the Kandy District and also the President of the Youth League of the Samagi Jana Balavegaya.

The Supreme Court bench will comprise the Chief Justice Jayantha Jayasuriya, Justice Buwaneka Aluwihare, Justice Sisira de Abrew, Justice S. Thurairajah and Justice Vijith K. Malalgoda.

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Senasinghe announces quitting politics

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By Akitha Perera

Former non-cabinet minister of the yahapalana government Sujeewa Senasinghe announced yesterday that he would quit politics. 

He had also stepped down as the SJB Deputy Secretary, Senasinghe said. 

Senasinghe said that he intended to focus on his business in the future and that he would commence work on his PhD from January 2021. 

He unsuccessfully contested the Aug 05 general election from the Colombo district on SJB ticket.

Senasinghe commenced his political career as a member of the Western Provincial Council of the UNP. He was elected to Parliament twice from the same party. 

He earned notoriety by publishing a book denying the bond scam ever took place.

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Pujith insists his hands were tied during crucial period 

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By Rathindra Kuruwita

He had been aware that the activities and preaching of Islamists would have an impact on reconciliation, but those in higher positions were convinced otherwise, former IGP Pujith Jayasundara, yesterday, told the Presidential Commission of Inquiry (PCoI) investigating the Easter Sunday attacks.

The ex-IGP said that although he too had received information about activities of Islamic extremists by late 2018, he had been barred from the National Security Council (NSC) by then.

“I couldn’t share the information I had and I didn’t know what was discussed there. I couldn’t even assign a senior officer to represent me there.”

Jayasundara added that after he had received, on April 09, a report from State Intelligence Service (SIS) Director Nilantha Jayawardena about a possible terrorist attack, he forwarded the report to SDIG of Western Province, Nandana Munasinghe, SDIG crimes and STF M.R. Latheef, DIG special protection range Priyalal Dasanayake and Director of the Terrorism Investigation Division, Waruna Jayasundara and spoke to them over the phone.

Jayasundara said that he had also phoned all SDIGs in charge of provinces. The witness added that he had wanted to ensure that there would not be a leak, causing unnecessary problems in society.

“For example, the letter I sent to the Special Protection Range (SPR) was leaked to the media after the attacks.”

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