Govt. between devil and deep blue sea
Posted on August 9th, 2016

 Editorial Courtesy The Island

The government has received another sobering gavel blow from the Supreme Court. Speaker Karu Jayasuriya informed Parliament yesterday that the apex court had held that the VAT (Amendment) Bill was unacceptable as it did not adhere to due process. The court previously suspended the implementation of the VAT and the Nation Building Tax (NBT) increases.

The government may be able to overcome the constitutional snag at issue, which is the least of its problems. What really matters is how to mitigate the adverse political fallout of the VAT increases. This is a worrisome proposition for the powers that be.

The government has, thanks to the VAT and NBT hikes, alienated the business community which is usually sympathetic to UNP-led administrations. Traders’ unions had threatened to hold a countrywide hartal yesterday in protest against the presentation of the VAT Bill, but they decided to put it off following an undertaking given by President Maithripala Sirisena that it would be put on hold and all stakeholders consulted before its presentation to Parliament. The President has made a virtue of necessity!

International lending institutions are, not to put too fine a point on it, Shylocks; they stick to their conditions like limpets. The government is desperate for money and it won’t get IMF funds unless the constricting aid conditions are adhered to. The political cost of fulfilling those conditions is enormous. The government thus finds itself between the devil and the deep blue sea.

The government has no one to blame but itself for its predicament. In the run-up to last year’s regime change, it undertook to bite off more than it could chew. The Rajapaksas did not anticipate defeat and their rivals did not expect to win. Hence, the latter promised the people the sun and the moon plus a massive pay hike of Rs. 10,000 to the state employees among other things in its desperate bid to win. That offer raised many an eyebrow and not many expected it to be feasible. Unfortunately, for the incumbent government, its election pledges to grant economic relief to the people had to be carried out immediately after the presidential election because it had to face a parliamentary election which came a few months later. The huge reduction in fuel prices, no doubt, stood the public in good stead, but the government revenue dropped drastically as a result. Fuel consumption also shot up, causing the import bill to balloon further.

Meanwhile, the MPs, straddling the fence, are wary of voting for the VAT bill in its present form for fear of incurring the wrath of the masses and the business community upon whom they are dependent for campaign funds. Minister Dr. Sarath Amunugama has recently declared that he will vote for the VAT bill come what may. He may be able to do so because he is a National List MP. Political rejects brought in as MPs through the National List can also back the VAT increases. Others are mindful of the fact that they won’t be able to go before the people again if they vote for aggravating public woes further.

The government is expected to give the public some tax relief before presenting the VAT (Amendment Bill) to Parliament. Increasing taxes and giving small cuts here and there are of little use in mitigating the economic burden heaped on the public. It will be a case of swings and roundabouts for the people, crying out for relief. It is said that a tax cut to compensate for a tax increase is only a ruse.

6 Responses to “Govt. between devil and deep blue sea”

  1. Fran Diaz Says:

    Way to go, Island Editor ! You have said it all here !

    For Ranil & Co : There is no such thing as FREE group (40 upbeat people) trips to Davos, Switzerland, with hotel costs at least at $2,000 per night there.

  2. Ananda-USA Says:

    I have an idea for the Yamapalanaya Govt.

    RESCIND the Rs 10,000 salary hike AND require refund of monies already paid to them. Getting the refunds will be like wringing blood out from a rock …. but that should be easy for the Yamapalanaya experts.

    The Yamapalanaya can then blame for giving the salary onto the previous govt by saying that giving that increase was THE ONLY WAY FOR THE REGIME CHANGE TO SUCCEED ….. for the benefit of the people, of course! Any fool can see that!

    This reversing should work just as well as the earlier Yamapalanaya criticism of MR Govt’s infrastructure development projects (Colombo Port City, Hambantota Port, Matt ala Airport, Superhighways etc) that are now being TOUTED as strokes of GENIUS conceived by the MAXIMUM LEADER Ranil after his begging trip to China succeeded, albeit at greater cost to the nation, in restoring the funding and assistance from that much maligned great ally of the Sri Lankan people.

    These are despair ate times for these desperate people in the Yamapalanaya govt; anything and everything is possible before the ceiling caves in!

  3. Dilrook Says:

    Udaya Gammanpila explained the VAT debacle very well. I encourage everyone to listen to it. The video is in adaderana.lk.

    As he correctly said, people must praise on a daily basis Wimal Weerawansa, lawyer Manohara De Silva and MP Sisira Jayakody for delivering them from the VAT curse. Going by government expectations, people have already saved 30 billion rupees thanks to them.

    Meanwhile Fonseka has been allocated an additional 59 billion rupees for his day to day ministry expenses.

  4. Ananda-USA Says:

    Dilrook,

    It continually amazes me that while pleading poverty and inability to balance the budget, and increasing taxes on commkn folk, the Yamapalanaya pundits continue to create and lavishly fund more ministries, buy convoys of new luxury vehicles, and propose all kinds of new projects!

    Should not the belt tightening begin at home, in their own ministries?

  5. NAK Says:

    This government of ‘yamaplanaya’ must decide whether they allow themselves to be devoured by the devil or jump in the deep blue sea,soon without making the country suffer any more.

  6. Fran Diaz Says:

    Leading by Good Example is not for Yahap !

    Central Bank scams and other law breaking deeds done by Yahap are swept under the table, while useless distractions such as arresting people on false charges, are placed before the public of Sri Lanka.

    To gain credibility, Yahap has to first :

    * REMOVE THE ILLEGAL 13-A.

    * Also, Tamil leaders have REVOKE the Vadukoddai Resolution (1976) – Eelam through Violence.

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