VAT test for MS (Maithripala Sirisena)
Posted on July 12th, 2016

Editorial Courtesy The Island

President Maithripala Sirisena finds himself in an unenviable position. Having lost the backing of a sizeable section of the SLFP, he is now at the mercy of the UNP, which undermines his authority. He cannot assert himself and act according to the dictates of his conscience lest he should jeopardise the UNP-led government’s interests and run the risk of paving the way for a comeback of his arch rivals––the Rajapaksas. The VAT dilemma has worsened his predicament.

The VAT issue is likely to bring the President and the government on a collision course again. President Sirisena revealed in the run-up to the last parliamentary election that he had called for the removal of the then Central Bank Governor Arjuna Mahendran under a cloud over a bond scam. He came under pressure from many quarters to translate his words into action. He dithered on that issue for more than one year but had to act when the question of another term for Mahendran arose.

The Central Bank dispute almost ruined the political marriage of convenience between the UNP and the SLFP with President Sirisena and Prime Minister Ranil Wickremesinghe playing a game of chicken. But for the deus ex machina which came in the form of their agreement on a ‘compromise candidate’, the Central Bank drama would certainly have had a different ending.

The President made a public display of his abhorrence of the controversial VAT increase, a few moons ago. He did not mince his words when he condemned the tax hike, declaring as he did that the officials responsible for that would have to go home. But, nothing of the sort happened and he was left with egg on his face when the government went ahead with VAT and NBT hikes, much to the dismay of the hapless public and small-time traders who expected him to safeguard their interests.

Now that the Supreme Court has held that the tax revisions haven’t been effected properly, it will be interesting to see what President Sirisena will do. The apex court has given the government a choice between having the VAT and NBT increase suspended until the final determination of a petition filed by the Joint Opposition and obtaining parliamentary approval for the tax revision. An opportunity has presented itself for the President to make a meaningful intervention on behalf of the public and the traders staging street protests against the VAT and NBT hikes.

We are not short of government politicians who shed copious tears for the masses struggling to keep the wolf from the door. Some of them have sought to woo the resentful public by pretending to be averse to the VAT and NBT increases. They have so far been able to run with the hare and hunt with the hounds, but now they are in a quandary. They will have to back the tax amendment bill when it is put to the vote in Parliament or oppose it and incur the ire of the party leadership in the process.

The JVP is sure to make a great deal of political capital out of the tax increases by tapping public anger to shore up its crumbling image and gain political traction. The SLFP will be in a dilemma as its parliamentarians in the present Cabinet won’t be able to oppose the tax increases; nor can they toe the government line for fear of incurring the wrath of the public.

Will the President make good on his promise to ensure that the people are not further burdened with tax increases and order the SLFP MPs to vote against the tax revision bill. Will he make a U-turn and help the government secure the passage of the bill so that one main IMF condition for releasing the remaining tranches of its bail-out package will be satisfied? Or, will he allow the SLFP MPs to opt for a conscience vote so as to play it safe?

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