Yahapalana Shylocks
Posted on October 22nd, 2018

Editorial Courtesy The Island

Former Petroleum Minister Chandima Weerakkody has called the government’s fuel pricing formula an affront to the people’s intelligence. He views it as a mechanism contrived to jack up fuel prices continually and raise funds for a spendthrift government. He is one of the ousted SLFP ministers who never miss an opportunity to settle scores with the government. However, he seems to have struck a responsive chord with the irate public reeling from the seemingly never-ending petroleum price hikes. One is at a loss to understand why some government ministers admitted, in public, a few weeks ago, that they could not comprehend the aforesaid formula, which is ludicrously simple.

An increase in fuel costs invariably pushes the general price level up. The problem with prices in this county is that they are sticky; even if the factors that lead to their increases cease to be, they still remain high. A substantial fuel price decrease is not possible before the next provincial council elections, which have been postponed indefinitely, and the cost of living is bound to soar further. It is only wishful thinking that transport costs will come down even in the unlikely event of a considerable fuel price reduction.

As for managing the cost of living and curtailing the ever increasing cost of production which is sure to put many a small venture out of business, the need for keeping fuel prices and electricity tariffs at affordable levels cannot be overemphasised.

Going by the yahapalana pricing formula, fuel prices can be brought down by reducing government taxes. No government can do without taxes and fuel is taxed all over the world. But tax reductions will be within the realms of possibility if wasteful government expenditure is curtailed. Petrol (regular) and diesel (regular) are currently taxed at the rate of Rs. 53.68 and Rs. 25.48 per lire respectively.

The government is currently on an election-oriented spending spree, camouflaged as a development drive. It is labouring under the delusion that development gimmicks will help it gain some traction on the political front, where it has suffered humiliating setbacks. Public funds are also allocated with a generous hand for a controversial soft loan scheme, which has come under heavy criticism as a vote-catching project.

A wag says publicity for the opening of a culvert costs the public as much as the construction of a new bridge thanks to ruling politicians’ ballooning egos. This is the name of the game in politics. We have pointed out, in this space, that the number of ships calling at the Hambantota Port has not yet exceeded that of dancers at the grand opening of the facility under the previous government. Such ‘boru shows’ did not help the Rajapaksa administration remain in power. The tradition continues. Politicians have no moral right to gain mileage from projects implemented with public funds, a sizeable chunk of which they and their kith and kin help themselves to by way of kickbacks. This kind of expenditure can be curtailed substantially, especially in times of crisis.

A cursory glance at the Appropriation Bill 2019 shows that fund allocations for the President and the Prime Minister have been increased significantly. But, as for the people, the real income has been declining steadily. It costs the taxpayers the earth to maintain their elected representatives who are living extravagantly. If the government adopts the austerity measures its leaders promised before the 2015 regime change, a great deal of funds can be saved and the need for jacking up fuel prices on a monthly basis obviated.

Regrettably, the government does a Shylock by exacting its pound of flesh in the form of extortionate taxes on fuel while claiming to uphold what it calls ‘compassionate governance’.

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