By C .A. Chandraprema Courtesy Island

The present government has, since last January when it took office, used all the wrong imagery in relation to government finances. The interim budget of February was hailed as a ‘Robin Hood budget’ where money would be taken from the rich and distributed to the poor. And indeed the interim budget did make some revenue proposals which resembled what the legendary Robin Hood did – take money from the rich and distribute to the poor. All those who owned mansions over 10,000 square feet or valued at over Rs. 150 million were to be slapped with an annual tax of Rs. one million. All private companies that made over Rs. two billion in profits in the 2013/2014 financial year were to pay a one off tax surcharge at the rate of 25% of their gross earnings. Every casino owner was to pay a one off exaction of Rs one billion, every mobile phone operator was to pay Rs. 250 million. Satellite TV service providers with more than 50,000 subscribers were to pay Rs. one billion, every tavern and every bar was to fork out Rs. 250,000 each. Even those migrating were to be taxed 20% of whatever money they were taking out of the country through legal channels.

So far so good! All those named above seemed to be able to pay these taxes. Rs. 1 million a year would be peanuts to anyone living in a house valued at over Rs. 150 million (over one million USD) and if the bar owners were made to cough up Rs. 250,000 each they would be left muttering with resentment but may not be driven to bankruptcy. The most harmful of these exactions was the 25% super gains tax on companies that had made more than Rs. two billion in the 2013/2014 financial year. When the most profitable and technologically advanced private enterprises are subjected to rapine in this manner that will have a direct impact on the whole business climate in the country. The accompanying political rhetoric of robbing the rich to give concessions to the poor would do nothing to help. That kind of talk would have been more suited to N. M. Perera’s policies in the 1970s when he tried to defeat the capitalist class through taxation.

The Ceylon Chamber of Commerce has suggested that the Finance Bill that has been placed on the order paper of parliament be amended before enactment. But such appeals will not produce results because the government is in dire need of money and they have targeted a revenue of Rs. 50 billion from the super gains tax alone. They can’t forego that kind of money easily. The Chamber should have challenged the Finance Bill in the Supreme Court within a week of it being placed on the order paper of parliament. This writer thought this Finance bill was probably the craziest piece of financial legislation that we have seen since the 1970s but unbeknownst to many including this writer there was an even crazier piece of legislation among the seven financial bills that were place on the order paper of parliament on 22 September. It was Chitra Weeraratne’s brief report titled “Telecom Levy Bill withdrawn” which appeared in this newspaper a few days ago that made this writer read the Telecommunications Levy Bill that had been placed on the order paper of parliament along with the controversial Finance Bill referred to earlier.

What after all can be more innocuous than a telecom levy? Even if one sees a bill titled ‘Telecom Levy Bill’ anybody’s reaction would be to ignore it as some routine levy on telecommunication services. In any case no one would think that there could be two incendiary bombs in the same batch of financial bills. The Telecommunications Levy Bill was withdrawn because someone challenged it in the Supreme Court. But had it been enacted that would have been the equivalent of telecommunications Armageddon in this country. One has to read it twice or thrice to convince oneself that it has not been misread. This telecom levy was to be charged retrospectively on the value of the telecommunication services provided to recipients each month as follows:

= From January 1 2011 to 31 December 2012 at the rate of 20%.

= From January 1 to December 31 2013 at the rate of 10% for internet services and 20% for other telecom services.

= From January 1 2014 to 31 April 2015 at the rate of 10% for internet services and 25% for other telecommunications services.

= From April 1 2015 onwards, at the rate of 10% for both post paid and prepaid services for internet and 25% for other post paid telecommunications services.

In other words, this levy would apply both retrospectively and prospectively, backwards as well as forwards. The money would have to be collected by the service provider and sent to the government. This was not aimed at high users of telecommunications services either where bills over a certain threshold would be charged this levy. It was to be imposed on all users of telecommunication services both high users and low users, the rich and the poor alike on the total value of any telecommunication services they may have received from as far back as January 1 2011! The Minister could specify a date or a period after April 1 2015 when this levy will apply as regards its prospectively applicable segment. The retrospective part will have to be forked out by the service provider up front and no doubt passed on to the consumer.

This beggars belief. The only reason why this writer believes he had read the Bill correctly and not misunderstood its contents is because the government has been forced to withdraw it in the face of a challenge in the Supreme Court. This is not revenue collection. This is insanity pure and simple. If the super gains tax can be described as ill-advised and seriously counterproductive, the aborted Telecommunications Bill can only be described as plain crazy. This was a government that came in promising to provide free Wi Fi internet services to the youth of this country. If this Bill had been passed by parliament, the youth of the nation would have had to congregate at the railway stations and bus stands that had been provided with free Wi Fi services to use the internet because it will be unaffordable in their homes! What is frightening is that this Bill was first issued in March this year. If the government was this desperate for money back in March, they should be even more desperate by now. What other financial horrors are in store for us in the near future?