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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AG not bound by its recommendations, yet to receive report
PCoI on Easter Sunday attacks:
By Shamindra Ferdinando
Attorney General Dappula de Livera, PC is not bound by recommendations made by the Presidential Commission of Inquiry (P CoI) into the 2019 Easter Sunday carnage, or presidential directives in that regard, according to authoritative sources.
They said that the AG couldn’t under any circumstances initiate legal proceedings until he had received the full PCoI report.
President Gotabaya Rajapaksa received the PCoI report on Feb 1. The President’s Office delivered a set of PCoI reports to Speaker Mahinda Yapa Abeywardena on Feb 23, a day after the report was presented to the cabinet of ministers. The Island raised the matter with relevant authorities in the wake of a section of the media reporting the PCoI recommending punitive measures against former President Maithripala Sirisena, Defence Secretary Hemasiri Fernando, IGP Pujitha Jayasundera, Chief of State Intelligence Senior DIG Nilantha Jayawardena, Chief of National Intelligence retired DIG Sisira Mendis and All Ceylon Makkal Congress (ACMC) leader and Samagi Jana Balavegaya MP Rishad Bathiudeen et al over the Easter Sunday carnage.
Sources pointed out that due to the inordinate delay in sharing the PCoI report with the AG, the department hadn’t been able to take preliminary measures required to initiate the proceedings. Sources said that a team of officers would take at least six weeks or more to examine the report before tangible measures could be taken.
With the AG scheduled to retire on May 24, 2021, even if the AG Department received the P CoI it would be quite a tough task to initiate proceedings ahead of retirement, sources said. However, in terms of the 20th Amendment to the Constitution enacted in last October, both the AG and the IGP could receive extensions beyond 60 at the President’s discretion.
Dappula de Livera received an Acting appointment as the AG a week after the Easter Sunday carnage whereas his predecessor Jayantha Jayasuriya, PC, was elevated to Chief Justice.
Responding to another query, sources said that the Attorney General two weeks ago requested Secretary to the President for a copy of the P CoI. However, the AG was yet to receive one, sources said. In spite of the AG not receiving a P CoI copy, the AG had instructed the IGP to obtain a copy of the report when he requested the police to complete investigations into the Easter Sunday carnage. The AG issued specific instructions after having examined police files pertaining to the investigations.
The IGP, too, hadn’t received a copy so far though some sections of the report were in the public domain.
Agriculture Minister Mahindananda Aluthgamage displayed at a live political programme on Derana a copy of the P CoI report he received at the cabinet meeting earlier in the day.
Sources said that the Attorney General’s Department couldn’t decide on a course of action in respect of the Easter carnage on the basis of a section of the report. In terms of the Commission of Inquiry Act (Section 24), the AG enjoyed significant powers/authority in respect of investigations; sources said adding that the Department urgently required both the P CoI report and police investigations report. The Attorney General’s Department has raised the delay in receiving a P CoI report amidst the Catholic Church attacking the government over the same issue.
Sources said that ministerial committee appointed to study the P CoI report couldn’t decide on how to proceed with the recommendations and the matter was entirely in the hands of the AG. Sources pointed out that the delay on the part of the government to release the report had received the attention of sections of the international media, including the New York Times. Public Security Minister retired Rear Admiral Sarath Weerasekera having met Malcolm Cardinal Ranjith at the Bishop’s House on Dec 8, 2020 said that the AG would get a copy of the P CoI report once the President received it. Minister Weerasekera said that the CID had handed over the relevant files after having completed investigations into eight blasts. Referring to the Parliamentary Select Committee (PSC) report on the Easter Sunday carnage, the former Navy Chief of Staff said that all such documents would have to be brought to one place and considered before initiating legal proceedings. Acknowledging that there could be delays, lawmaker Weerasekera said that on the instructions of the Attorney General a 12-member team of lawyers was working on the case. The minister vowed to expose the mastermind behind the Easter Sunday attacks. Investigations continued while some of those wanted were overseas, the minister said.
The minister acknowledged that the Attorney General couldn’t proceed without the P CoI report. Minister Weerasekera reiterated that once the President received the P CoI report, it would be sent to the Attorney General. The minister said that there were documents two to three feet high that needed scrutiny. The minister assured comprehensive investigation. The minister said that investigations pertaining to eight blasts had been completed and the reports handed over to the AG. However, the Attorney General had found shortcomings in those investigations.
JVP picks holes in PCoI report
By Saman Indrajith
The Presidential Commission of Inquiry on the Easter Sunday bombings had failed to identify the mastermind of , the JVP said yesterday.
Addressing the media at the party headquarters in Pelawatte, JVP Propaganda Secretary MP Vijitha Herath said that the PCoI report had levelled accusations against former President Maithripala Sirisena, former IGP and head of intelligence for their dereliction of duty, shirking of responsibilities and not taking action to prevent the attacks and negligence. There were reference to the causes of the terror attacks and actions to be taken to avoid such attacks and the influence of extremist organisations. “However, there is no mention of the mastermind of the attacks, the handlers of the attackers and those whose interests the carnage served. It is also not mentioned whether there has been any foreign or local organisation behind those attacks. As per the PCoI report the attack took place as a result of culmination of extremism.
“According to the PCoI the extremist activities were a result of the prevailing political situation then. The entire nation was waiting to see who was responsible and who masterminded those attacks. The PCoI has failed to identify the true culprits responsible for the terror attacks. The report says that the leader of the suicide cadres killed himself in the attacks and it was a puzzle. That means those who are actually responsible for the attacks are still at large. The report does not provide exact details of the sources of the attacks. The PCoI had sittings for one year and five months. It summoned various persons and got their statements but it has failed to shed any light on the terror attacks. Everybody knows that the top leaders of the government and heads of security and intelligence establishments failed in their duties. Ranil Wickremesinghe was the second in command and he too is bound by the responsibility but the PCoI report fails to identify him as one of the persons against whom legal action should be instituted. The PCoI has treated Wickremesinghe and former President Maithripala Sirisena differently. We are not telling that this report is a total failure but we cannot accept this as a complete report. The PCoI handed over its report to the President on Feb 1. After 23 days it was sent to Parliament. Now, a copy of the report is there in the parliamentary library for the perusal of MPs.”
Herath said that the PCoI did not have powers to take punitive action. “It only has powers to name those responsible and recommend action to be taken against those named.
TNA MP faults govt. for delay in answering questions, gets under Johnston’s skin
By Saman Indrajith
It did not matter whether the MPs were wearing pressed clothes or had travelled long distances when their questions were answered, Chief Government Whip Johnston Fernando told Parliament yesterday.
The Minister said so in response to a complaint by Batticaloa District TNA MP Shanikyan Rasamanikkam, who expressed his dismay for government taking time to answer a question raised by him.
MP Rasamanikkam has raised a question whether the Minister of Health is aware that the Dikkodai ospital, located in the Batticaloa district is not used for public purposes and the patients who visit the hospital for receiving services, face inconveniences, owing to that. On behalf of the Minister of Health, the Chief Government Whip and Minister asked for additional two weeks time.
MP Rasamanikkam: I come to parliament from Batticaloa, which is 422 km away. To attend Parliament we take great care including pressing our clothes. After taking so much trouble to come there braving the pandemic threat we do not get answers. There is a Health Minister and Acting Health Minister and neither of them is here. I saw Minister Dr Sudarshini Fernandopulle in the House this morning. She too has gone out. I travel more than 800 km. We could attend to many other problems. It is because the government does not give answers we are conducting protest marches, but when we do so we are hauled up before courts.
Chief Government Whip Minister Johnston Fernando: Every MP comes here wearing pressed clothes. But that has nothing to do with questions and answers here. I have been requested by the subject minister to ask for two weeks’ time. The MPs have a right to ask questions and in the same way the ministers have the right to ask for time. On the other hand, whether you cover 400 km to reach parliament does not matter. The majority of MPs travel 200 to 250 kilometers to come to Parliament. It is for that purpose they contest elections and get elected. Once elected the distance is not an issue you have to come to Parliament. The government has answered all your questions. This is the first time the Minister has asked for additional time. It is unfair for you to level charges. A more responsible conduct is expected of you as an upcoming political leader.