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Top Army intelligence officer explains sorry state of handling national security during previous regime



By Rathindra Kuruwita

Little attention had been paid to extremism by those in charge of security prior to the Easter Sunday attacks, a senior Army intelligence officer, on Saturday night, told the PCoI investigating the 21 April 2019 terrorist attacks. The officer wished to remain anonymous.

The officer said that security, too, had been neglected during the previous administration.

The officer, previously attached to the office of Chief of National Security (CNI,) had been summoned to give evidence about his tenure there.

The Attorney General’s Department representative leading evidence brought to the witness’ attention a document sent by the State Intelligence Service (SIS) on 22 July 2017 to the then Defence Secretary.

The document consisted of 94 names of those involved in extremism. The then Defence Secretary had sent that document to then CNI Sisira Mendis.

The witness said the persons named in the document such as Mohommad Caseem Mohommad Zahran, Mohommad Caseem Mohommad Rilwan, Mohommad Caseem Mohommad Zainee and Abdul Latheef Jameel Mohommad had been involved in the Easter Sunday attacks and the subsequent incident at Sainthamaruthu on 26 April 2019.

“I can’t say if CNI Mendis paid attention to this. If he had issued an instruction about the document, it should be on top of the document as a note. I can’t see such a note here.’

The Attorney General’s Department representative: “Former CNI Mendis told the PCoI that a lot of similar documents had come to him and that there were officials at the CNI office who knew what to do. He said that’s the reason he had not given any specific instructions.”

The witness smiled but didn’t comment.

The AG’s Department representative also showed the officer another document.

She said: “This document mentions an organisation and that the son of a former deputy minister was involved in the organisation. Phone records of this person show that he was in contact with MPs, senior policemen and various individuals in the UAE. What did the CNI do about this?”

Army intelligence officer: “I will reveal that in camera.”

Chairman of the PCoI: “Did the Easter Sunday attacks happen because the previous government paid attention to other matters, ignoring national security?”

Army intelligence officer: “I can say that little attention was paid to extremism. Then CNI hardly spoke to the then Defence Secretary about this. I personally feel that not enough attention was paid to national security.”

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Personal income tax shock dims economic activities



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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