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

Published

5 years ago

2020/09/9

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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Coal scam has become litmus test for NPP: FSP

Published

29 mins ago

2026/02/7

Thilina Walpola

The scam involving the import of substandard coal has become the litmus test for the NPP Government, says the Frontline Socialist Party.The substandard coal scam has become the litmus test for the NPP government’s integrity and transparency, Frontline Socialist Party (FSP) Education Secretary Pubudu Jayagoda said on Thursday, alleging serious irregularities and contradictions in the government’s handling of coal procurement for the Lakvijaya Power Plant.

Addressing the media in Colombo, Jayagoda strongly rejected recent statements made by Tilvin Silva, General Secretary of the JVP, during an interview with a state television channel on the ongoing coal tender controversy. He said several of Silva’s claims were factually incorrect and echoed earlier statements made by the Minister of Power and Energy that had already been abandoned after being proven false.

“There are serious inaccuracies in the views expressed by Tilvin Silva. Some of these false points were first raised by the Power Minister a week or two ago, but he stopped repeating them once we produced documentary evidence,” Jayagoda said, adding that the JVP General Secretary appeared to be “not up to date with the facts.”

Jayagoda rejected claims that coal had previously been purchased without calling for tenders from a politician’s company at inflated prices. He said that since the Lakvijaya Power Plant commenced operations in 2008, tenders had been called annually and contracts awarded to the lowest bidder.

He also dismissed assertions that no tenders were called in 2023. “The Power Minister initially made this claim, too, but stopped after we presented the tender advertisements,” Jayagoda said. He questioned contradictory statements made by government representatives, pointing out that while Silva claimed no tender was called in 2023, references to 2023 tender specifications had been publicly cited by Deputy Minister Kumara Jayakody.

“If no tender was called in 2023, how were tender specifications published that year?” Jayagoda asked, describing the claims as mutually contradictory.

According to Jayagoda, tenders were, indeed, called in 2023 and the contract was awarded to Coral Energy. When that company failed to supply coal on time, the supply responsibility was transferred to Black Sand. He further rejected claims that no tenders were called in 2024, explaining that during the bidding process a company named Potentia had offered a lower price than the initial lowest bidder.

“Based on approvals from the Technical Evaluation Committee, the Procurement Committee, the Cabinet, and finally the Attorney General, coal was purchased from the lowest bidder,” he said, adding that any doubts regarding the legality of the process could be investigated through proper legal channels.

However, Jayagoda stressed that the controversy was not merely about whether tenders were called, but about how the process was manipulated. He listed several concerns raised by the FSP from the outset, including a four-month delay in calling for tenders, changes to tender specifications, and the tender period being reduced by half.

“Urgency was cited as the justification for these changes, yet there was a six-week delay in awarding the tender. That clearly shows there was no real urgency,” he said.

Jayagoda also alleged that laboratory reports were concealed when substandard coal shipments were imported, in order to protect the supplying company. He said that despite a contractual clause requiring the tender to be cancelled if two shipments failed quality standards, the government continued with the order. He further accused the authorities of violating the agreement by approving emergency purchases in a way that benefited the supplier.

“The entire process is suspicious,” Jayagoda said. “A Minister will not resign unless they admit to fraud. But it is the responsibility of the President and the government to conduct an independent investigation, determine whether fraud has occurred, and remove the Minister if wrongdoing is established.”

He concluded by reiterating that the coal tender controversy would serve as a decisive test of the government’s commitment to accountability. “This is the litmus test for the integrity and transparency of the government,” Jayagoda said.

News

INS Gharial delivers 10 Bailey Bridges to Lanka

Published

30 mins ago

2026/02/7

Thilina Walpola

INS Gharial delivering Bailey Bridges to Colombo Port on Thursday

A consignment of 10 Bailey Bridges arrived in Colombo from Visakhapatnam aboard the Indian Navy ship INS Gharial and was formally handed over at a ceremony held on 05 February.The bridges were handed over by the Acting High Commissioner of India to Sri Lanka, Dr. Satyanjal Pandey, to Deputy Minister of Ports and Civil Aviation, Janitha Ruwan Kodithuwakku.

The additional Bailey Bridges have been provided under India’s grant assistance of USD 5 million for post-Cyclone Ditwah reconstruction, aimed at strengthening critical connectivity infrastructure in affected areas. Another consignment, carrying the remaining bridge components, is expected to arrive shortly.

The supply of Bailey Bridges forms part of India’s comprehensive USD 450 million Reconstruction and Rehabilitation Package announced by India’s External Affairs Minister, Dr. S. Jaishankar, during his visit to Sri Lanka, following Cyclone Ditwah.

The newly supplied bridges are to be installed at various locations across the country. Technical assessments for installation are being carried out by Indian Army engineers, in close coordination with the Sri Lankan Army and the Road Development Authority (RDA).

India has previously supplied four Bailey Bridges to Sri Lanka, two of which were installed in the Kilinochchi District and two along the Kandy–Ragala Road. These bridges have played a key role in restoring connectivity in difficult and hilly terrain, improving access for local communities and facilitating the resumption of essential services, livelihoods, and economic activity.

News

Anusha Palpita further remanded until 20 Feb.

Published

32 mins ago

2026/02/7

Thilina Walpola

Former Secretary to the Ministry of Mass Media and former Chairman of the Telecommunications Regulatory Commission of Sri Lanka (TRCSL), Anusha Palpita, was further remanded until 20 February by the Colombo Chief Magistrate’s Court.

The Court issued this order after considering the facts presented by the Bribery Commission and the attorneys representing the suspect.

Palpita was taken into custody and subsequently produced before the court on 23 January in connection with an investigation conducted, based on information received by the Bribery

Commission regarding the failure to disclose the source of assets amounting to Rs. 46 million, the Commission stated.

According to the Bribery Commission, Anusha Palpita arrived at the Commission on 23 January 23 was taken into custody after recording his initial statement.

The arrest was made on the charge of accumulating significant assets and property, exceeding his income, during a specific period, following an investigation into assets gathered beyond his legal earnings, within that time frame.