The Sunday Leader

VAT: Take People Into Confidence And Be Exemplary

No democratic government in its senses will impose additional tax on the people unless dire circumstances force it to do so.

However this country is unfortunate to have a set of part educated economists and cranks of the left whose knee-jerk reaction to any tax, particularly if not made in the budget, as IMF or World Bank dictates. Those of the younger generations may believe this crap for some time but seasoned veterans, who have gone through many monsoons, realise that it is absolute bilge which they too believed in their salad days.

The IMF and World Bank are two international institutions that grant loans on the best possible terms at the lowest rates of interest. Being banks of repute they will want to know the purposes of the loans and terms on which it can be paid back as any commercial bank does. These are not dictates of these institutions.

The tragedy of the current economic situation is a consequence of reckless financial buccaneering of resorting to borrowing from foreign banks tremendous amounts at very high rates, not giving a damn on how the loans are to be repaid. Repay we must, to avoid being declared a failed state.

The financial policies followed during the past 5 to 7 years, even after the end of a war that left us in dire straits, could be described as: Eat, drink and be merry – for we die tomorrow – better expressed in Sinhala - Kapalla, beepalla, jolly karapalla……. ). Now billions have to be repaid with high rates of interest leaving us caught in a death trap.

The depths to which Sri Lankan politics has fallen could be gauged by the previous regime’s silly denial of their follies: The economy was on a sound footing when they handed over and the entire collapse came but during the past one year. A demagogue has been defined as a person who knowingly tells lies to people considering them to be idiots. Unfortunately quite a section of the people often falls into this category. In this situation a government must take the people into their confidence. Great efforts have been made to avoid imposition of VAT on basic commodities and services essential to the people. If new commodities and services are to be brought under VAT, people should be informed in order keep their confidence.

There appears to be some sort of misunderstanding or racketeering when certain sectors overlap such as in the health sector between government and private institutions. When government hospitals are short of drugs (given free) patients are asked to purchase them from the private sector. The government has made it clear that there is no VAT imposed on any drug but there are reports of some private pharmacies charging VAT. Such instances should be probed immediately.

The public, even of the middle class, will find it hard going such as in private hospitals. They will expect politicians, both in government as well as in the Opposition – Joint or Disjointed – to make sacrifices as being exemplary representatives.

The Opposition – the Joint Opposition – has been highly critical of some of the supplementary votes placed before the House for the repair of ministerial residences and some vehicles running into millions of rupees. It will be prudent if the ministers are called upon to postpone renovating their official residences for some time. These residences can’t be uninhabitable when it is said that the former incumbents lived in the lap of luxury just a year ago.

Purchase of new vehicles too should receive reconsideration. The purchase of such items would not go down well with those who threw the past incumbents out for the splendiferous lives they and their brood enjoyed at the expense of the tax payer.

Any government suffers a dip in its popularity at the end of the first year when the euphoria of victory recedes and demands are made to fulfill pledges which cannot be kept in one year’s time. The government is facing a severe onslaught of criticism from the opposition which it cannot ignore.

Despite difficulties confronting them, it is essential that by now their economic and financial strategies should be worked out to reach fruition before the six-year term ends. Or is it the strategy to go for a long term development plan, the beneficial results of which may not be experienced in six years?

The removal of the ban on Sri Lankan fish products to the EU was one significant achievement. The next should be the removal of the GSP followed by favourable trade deals that could stabilize the economy.

The challenge of today is to try and wade off the impact of VAT by taking the people into their confidence and be genuinely honest with them by making sacrifices.The Opposition’s strategy appears to be to keep their leader in focus and build a personality cult around him. It’s time the Sirisena – Wickremesinghe got down to nursing their electorates and going ahead with development other than to face the ridiculous charges made against them.


1 Comment for “VAT: Take People Into Confidence And Be Exemplary”

  1. roger Halliday

    If you are for the people please cancel all these df permits.
    it appears that this is a bribe considering the fact that vat has been increased to cover up losses of the previous regime.. why give permits when they can be sold. minister of finance please tell the people the loss of revenue to the state because of this gift?

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