UPFA Parliamentarian Bandula Gunawardena answering Ceylon Today said that the recent Budget presented to Parliament is nothing but a bizarre farce to deceive the public.

?: How do you see the recent Appropriation Bill proposals presented to the Parliament?

A: The proposals submitted by the Minister of Finance are a bizarre disguise. He has misled the public by drawing their attention to a fascinating picture stashing the conflicting and ugly proposals underneath. Let’s not criticize this Budget on the basis of the reduction of sugar prices by Rs 2, dried sprat by Rs 5 or domestic Gas by Rs 25. It is not a simple catenary like how it sounds. There is a deeper meaning underlying the budget. There are some adverse proposals which could change the future of the country, amongst the list that has been presented to the Parliament. We do not need a Minister to manage finances if the government raises reserves merely by increasing the taxes. The government has the monetary regulatory power, so that they could impose higher taxes to raise the government revenue. During the colonial time the British had imposed taxes for the body, even to domestic pets like dogs to raise the government revenue. That is not the ideal efficiency in State revenues.

There are fundamentals in raising revenues. French politician and a former Minister of Finance Jean Baptiste Colbert once said “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing”. More than the sibilant hissing, this budget triggers the people to scream out loud by the taxation policy underlying it.

Another important factor to consider is the state of achieving objectives presented in the last budget. When we analyze that we see number of areas where no progression has transpired. This is no isolated document; this is to be evaluated with the previous year.

?: So how do you see this years Budget?

A: Taxes have already been increased by the time the Appropriation Bill is presented to the Parliament. For an example, government has imposed the VAT provision even before couple of months before presenting the budget. See the government has imposed VAT when obtaining treatment from private hospitals. If you think straight the people who seek the services of the private hospitals are the people who save some funds for the government. Now that the government has imposed taxes on the same people who ease the weight on the State provided medical services. 25 per cent tax has been assigned on top of internet charges whereas the telecommunication industry in itself is subject to VAT. The government has imposed these taxes at a juncture where making available free internet had included in their election pledge. Look at the increase in utility charges. People don’t feel it now since they will only be applicable in December or January. Do you really think they have a fair and justifiable reply to this?

?: What are the salient areas of unfair taxes according to your assessment?

A: Well, I see basically the sectors like water supplies, health care, telecommunication and investment promotion are been hampered by enhanced taxation. Investors have started relocating their investment to more favourable geographic locations in the region. See the pressure mounted on the elite business community of the country. Are you aware that all chair persons of the top 20 public quoted companies are being questioned by the FCID by now. Sri Lanka is marching towards a Police State, so how can it be favourable to any business? Who would invest in the share market when the former Chairman of the Securities and Exchange commission is been put behind bars? Also look at the State acquisitions of enterprises. See how ‘CSN’ been taken over by the government, also see how the global enterprise ‘Avant Garde’ been torn down to pieces. How can an investor with a sound mind think of any investment in the country with no risk in investment?

As we all know, China, today is the biggest investor in the world. Finance Minister had a preconceived anti-Chinese mentality. Even when they were representing the Opposition UNP had criticized Chinese presence in the country. They had personified the Chinese as a bogey striving to control the country. Also, they said Sri Lanka was at the verge of becoming a Chinese colony. See Chinese have granted US $ 46 million to Pakistan, US $ 24 million to Bangladesh, US $ 16 million to India and also they funded England and Africa. However, we couldn’t get more than US $ 6 million to Sri Lanka up to now. How can the country receive funds when we constantly attack the biggest investor of the entire world? Not only the ill-treatment to Chinese assistance but the world renowned specialized institutions on credit rating evaluation like FITCH and MODE have rated Sri Lanka as high risk country to invest. This budget has created a total holocaust in the finance industry.

?: You emphasized the privatizing of some of the functions of the Central Bank of Sri Lanka (CBSL). How can
that be possible?

A: The Parliament is vested with the monetary power of the people. Parliament has vested the power to Central Bank with the Monetary Law Act No. 58 of 1949. As you may know CBSL is the apex body of the financial system of the country. CBSL works as an independent institution. For the first time in the history the government is striving to privatize the payment system of the CBSL. The payment system is incorporated with the payment and settlement system Act No. 28 of 2005, the Chapter 4 of the Act prescribed the CBSL to oversee the operation of payments and clearance. Now the Finance Minister has submitted a Cabinet Paper to establish a digitalized payment platform for the government. The Cabinet has approved the proposal. Subsequently the Governor of the Central Bank has extended his objections in writing regarding this decision. There were no issues raised up to now in this affair, so why do they need to change it completely when there are no issues with the present system?

?: What are the new restrictions imposed on personal savings in banks?

A: Tax relief on interest over personal investments in banks have been removed. Only the investments made by senior citizens are relieved from this up to a limit of Rs 1.5 million. The government has imposed a retention levy of 5 per cent on all the interest drawn from the savings in banks. The government has introduced a brand new tax to charge 0.5 per cent on every transaction above Rs 10,000. This is called the ‘Financial Transactions Tax’. If you go through the budget proposals you could see how that is craftily deceived in the text. Just imagine the impact it could make on the people?

?: What are the other areas that the taxes have been increased?

A: Amongst the many taxes, Court fee when filing a Case has been increased, Fire arm licence fee has been increased, Luxury tax on vehicles has been increased, Airport disembarkation fee has been increased by US $ 50, tax on telecasting dubbed foreign tele-drama’s has been increased, a Rs 200 fee is imposed when activating a new mobile SIM card and 10% tax is imposed on capital gains, fines have been increased for traffic offences, Nation building tax has been increased and many more.
Only relief granted is when importing beer. Water charges proposed to increase whilst mere Rs 10 tax assigned when importing beer to the country.

?: What do you think about the state of debt of the country?

A: You know, the per capita debt of the country has been increased by Rs 101,524.00 after this government came into power. 73 per cent increase in the per capita debt and numerically it accounts to Rs 36,714 under this government. Final balance sheet of the Budget is that the government has drawn more taxes from the people and at the same time they have made the same people glorious debtors, that indeed the beauty of this government. The graphical interpretations in the budget proposals states that the years 2009, 2010, 2012 and 2013 marked the insufficiency of the State revenues to pay the State debts. But in the years 2014, 2015, 2016 and 2017 government finds no difficulty in paying them. The budget deficit in 2009 was 9.9 and it was 86.2 per cent against the GDP. After the cessation of the war we reduced the budget deficit to 5.7 and it was then 71 per cent. In 2016 this government takes the budget deficit to 2.4 and the 76 per cent against the GDP. In 2014 the national debt was Rs 598 billion but it has grown to Rs 1,112 billion. You see the difference. These are not the ideal indicators of a stable economy.

?: The government says that the taxes have to be brought in to settle the debts left over by the previous government. What do you have to say about it?

A: See, they say these debts were obtained to do the mega projects undertaken by the previous government. In accordance to the budget document presented to Parliament states that the government had spent Rs 175 billion on constructing the Hambantota Port, Rs 27.8 billion for Mattala Airport, Rs 19 billion to the Central Defence command in Akuregoda, Rs 10 billion Lotus Tower, Rs 3 billion for the Conference Centre in Hambantota. Rs 0.5 billion Suriyawewa IT Park and Rs. 51 billion, Rs 14 billion for SriLankan Airlines and Mihin Lanka. Together that will account to nearly Rs 300 billion. But have you ever noticeed that by merely letting the rupee to take its market value has cost the government nearly Rs 285 billion during the last year. It is stated in the Annual Report of the Central Bank. Is this bad management or what?

?: The government has proposed to grant 50 per cent loan when foreigners purchasing properties in condominiums? What do you think about it?

A: This is really important. If the foreigner who was the recipient of such loan fails or refuses to pay back the loan as We have seen that in number of cases when properties were taken over by foreigners. Apart from that our banks should facilitate the requirements of the citizen. They should not be emptied to satisfy a bunch of foreigners. We should always encourage the influx of foreign exchange. Not that we should let foreigners to make use of our reserves. This is an era where outflow of foreign currency has become the trend, investors taking their wealth out of the country. Despite encouraging the investments I wonder why the government persuading foreigners to purchase our properties?

?: The government has proposed to formulate a Central Pension Fund amalgamating the employees Provident Fund and the employees Trust Fund. What do you think about it?

A: This is something the government should not touch. This is people’s money. The government has nothing to do with it other than managing it properly. I’m sure the trade unions and employees would take this to Court if the government take any action to remove it from the CBSL’s purview. There are countries where the same move has failed. Even United States and England have failed establishing a separate fund.

?: What do you think about the decisions to allow electronic payment methods such as pay pal to be introduced in Sri Lanka and allowing digital markets such as ebay in Sri Lanka?

A: My view is that we should do a comprehensive study on this. Relaxing the monetary restriction may affect the entire economy in situations where we least expect. So, the Monetary Board should further study and evaluate the necessity of this.