{"id":57497,"date":"2016-08-09T17:02:31","date_gmt":"2016-08-10T00:02:31","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=57497"},"modified":"2016-08-09T17:02:31","modified_gmt":"2016-08-10T00:02:31","slug":"govt-between-devil-and-deep-blue-sea","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2016\/08\/09\/govt-between-devil-and-deep-blue-sea\/","title":{"rendered":"Govt. between devil and deep blue sea"},"content":{"rendered":"

\u00a0Editorial\u00a0Courtesy The Island<\/em><\/span><\/h2>\n

August 9, 2016, 7:40 pm<\/span><\/p>\n

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.<\/p>\n

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.<\/p>\n

The government has, thanks to the VAT and NBT hikes, alienated the business community which is usually sympathetic to UNP-led administrations. Traders\u2019 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!<\/p>\n

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\u2019t get IMF funds unless the constricting aid conditions are adhered to.<\/strong> The political cost of fulfilling those conditions is enormous. The government thus finds itself between the devil and the deep blue sea.<\/p>\n

The government has no one to blame but itself for its predicament. In the run-up to last year\u2019s 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.<\/p>\n

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\u2019t be able to go before the people again if they vote for aggravating public woes further.<\/p>\n

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.<\/p>\n","protected":false},"excerpt":{"rendered":"

\u00a0Editorial\u00a0Courtesy The Island August 9, 2016, 7:40 pm 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 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[102],"tags":[],"class_list":["post-57497","post","type-post","status-publish","format-standard","hentry","category-economy"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/57497","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=57497"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/57497\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=57497"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=57497"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=57497"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}