The Sunday Leader

People Suffocating Under CoL As Ministers Continue To Party

by Ashanthi Warunasuirya

The unbearable cost of living has become one of the commonest complaints among the general public in Sri Lanka. With the prices of goods and services showing a drastic increase during the past few months, the cost of living has become the topic of discussion on the streets, on the bus and at any public gathering. Unfortunately however, in contrast to the raging prices, salaries and other sources of income have not increased accordingly. This has caused thegeneral populace to face severe financial hardships with regards to their day to day living. Making matters worse, recently private bus owners also threatened to strike unless bus fares were increased. In the end this too is going to be added to the burdens of the ordinary citizen. A positive capitalist market has always been in the UNP manifesto. But unfortunately that too has become a distant dream. Even though price control has been imposed on some essential commodities, it has thus far been confined to paper. Civil society organisations and social activists have raised their voices against these unjust economic conditions imposed on the general public. Following are some of their comments to The Sunday Leaderon the reasons and solutions to the present cost of living.

 

Salary hike main reason for rising CoL

Ranjith Vithanage, Chairman, National Movement for Consumer Rights Protection

At present the buying capacity of the general public has declined. A person who earns a monthly income of Rs. 30,000 has been compelled to pay at least Rs. 10,000 as taxes. Although expenses have increased, there is no parallel increase in income. This has severely affected our savings. Most of the income is spent on food, health, transport and education. And these have been subjected to heavy taxes. If bus fares are also increased it is going to make things worse.

These increased taxes have made it hard for people to live. In order to show our objection, a few weeks ago we got shop-owners to close their shops for a day in protest. One may think it unreasonable. Even though taxes are imposed upon the traders, eventually the money is drawn out of the pocket of the consumer. The problem faced by the traders is the decline in demand when the prices have gone up. Then their turnover is also going to tumble. So they have joined hands with us to protest against these unjust taxes.

When a product is priced at Rs. 1,000, the cost is usually Rs. 750. This gives the trader a profit of Rs. 250. But the consumer, while paying taxes for Rs. 1,000, pays a tax even for the profit of the trader. This is totally unreasonable. And if other trade unions are commencing strikes to gain their demands, there is no wrong in consumers demanding theirs.

Many people thought the economy would boom under a UNP government. This has also been discussed in the finance ministry. From what I have heard, the main reason for this is the sudden increase in the salaries of government employees by Rs. 10,000. By trying to satisfy a relatively small group of people, the majority of the people have been put to torture. The Rs. 2,500 salary increase has so far not become a reality. So the majority of the people have been affected.

A government needs taxes to survive. We too like to pay the due taxes but there should be some form of justice in return. It must be clearly visible that our money is being put to good use such as building infrastructure and increasing the quality of living.

Instead, we only see ministers and MPs importing super luxury vehicles and renting out buildings by spending billions of rupees of public funds. That is why even the income tax payers are reluctant to pay their dues. If the tax money is being put to proper use, then the people are going to pay without any fuss. Not enough taxes are being imposed on betting centres and casinos. There are fewer taxes for liquor and tobacco. This has created a vicious circle.

The President has promised the traders unions that the tax issue will be solved. But the finance minister claims that the businessmen have no knowledge about these measures. But as consumers we are waiting till the government provides a reasonable solution.

 

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Govt. using Rajapaksa regime as a scapegoat

Joseph Stalin, Chairman, All Ceylon Teachers Union

Before coming to power the present government was well in to the introduction of economic reforms that could benefit the public. They promised the people a better life. But after coming to power things have not gone the way the people anticipated. The budget had to be amended several times. This is a clear example of the lack of proper policy in the government. Most of the taxes were imposed and increased after the budget. This shows that the government does not have a clear plan. No matter what happens the government is using the Rajapaksa regime as a scapegoat to ignore responsibility. But the people know who is doing what. So the government should do something fast to keep their promises.

Instead of blaming the previous regime for everything that has happened, the present government must form a clear strategy to develop this country. Otherwise the working classes will be compelled to step on to the streets against the government. The working classes have overwhelmed the ruling elite at present. So we are trying to urge the government to take the correct decision.

 

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Taxes not increased in a fair manner

Gamini Viyangoda, Social Activist

The cost of living has increased while government spending has gone up. The present government has been compelled to pay the debts of the previous regime. But the present income of the government is not sufficient to pay such massive debts. The three main sources of income in our country come from foreign revenue, tourism and exports. Unfortunately the trade deficit between imports and exports is still at an unsatisfactory level. Our imports are still high. So our coffers are practically empty. We must have better foreign reserves. Since we have faced an economic crisis, naturally the government is compelled to increase taxes. Unfortunately tax has not been increased in a fair manner. There is an imbalance between direct and indirect taxes. Most of these are structural lapses so they cannot be solved in one go. There are weak points in the government’s economic strategy. Some decisions have been taken only considering the political aspect. For example, by reducing the taxes on fuel, the government has lost a considerable amount of revenue. It is fine if the benefit has reached the public.

But on the other hand the burden has been transferred to other essential commodities. This has an adverse effect on the economy. The government has now decided to increase VAT to expand income but this has caused hardships to the consumers. It all comes down to the mismanagement of funds. That is why the people are not receiving any benefit of tax reductions. It is true that this economic crisis was triggered by the previous government. But still that is not an excuse for the present government to rely on. Another reason for this increased cost of living is our failure to expand production. In 2005, 34 per cent of the GDP was covered by exports but in 2015 it dropped to 14 per cent. So our foreign reserves have plummeted. We cannot always rely on the revenue generated from the earnings of Sri Lankans working abroad. The decline of oil prices has affected the economy in the Middle East. This is going to affect those who work in the region. In the long-run, such avenues of income may fall. We must focus more on attracting foreign direct investments into the country. A country’s economy can only be salvaged by increasing production. The government is currently holding discussions with foreign countries such as China, Japan and USA regarding bringing in FDIs. This is going to take some time. So the people may have to be patient for some time. But the question is whether the politicians are making the same sacrifices they expect the people to make. It is unfair to see a minister have a 25 million rupee luxury vehicle when the people are unable to buy food from the market.

As an educated public, we must understand the level of the economic crisis we are faced with at present. This must be understood by the rulers as well. We must all join hands to build this country. People have become disappointed with the current conduct of some government politicians. So it’s up to the government to rectify the mistakes and do something productive soon.

 

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Govt. ripping-off people with taxes

Wasantha Samarasinghe, Convener, Voice Against Corruption

During the polls, the present government boasted that under a UNP rule the people would prosper like never before as the prices would come down while the salaries would go up. Such dreams cannot be achieved by magic.

A government must have an economic strategy and management. Only then can it perform all these ‘miracles.’ But at present the government is ripping the people off with taxes in order to provide luxury facilities for their own kin. That is why the cost of living has gone up making it hard for people to live. Now the whole country is protesting against these unjust taxes.

Soon the private hospitals and schools will increase their fees. Private buses will increase their fares. That is why they are protesting. Even the shop owners have come to the streets as their businesses have been affected by the taxes. In the end all these come down to the general public.

After all its attempts to revive the economy, the government has only been able to do things that ultimately increase the cost of living instead of gaining an income. Its economic plan is weak. The government has proved that they don’t have answers to reduce the cost of living inside a market economy.

We are currently engaged in non-stop protests against these actions of the government. We have declared a week-long protest throughout the country which will go on until the 13th. We will raise awareness about the weaknesses of the government and what the people should do to make things better.

 

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Paying off Rajapaksa’s debts is not an excuse

Prof. Mayura Samarakoon, Senior Lecturer, Department of Sociology and Anthropology, J’Pura University

Usually the taxes and the cost of living must be calculated according to the income of the ordinary citizens. First of all production must be increased. When production levels are increased the government can impose taxes upon the profits gained by the producers. On the other hand if the government intends to impose more taxes on the general public it must first prepare new avenues of income for the people. These are ordinary revenue policies of developed nations. They impose taxes upon people considering their level of income.

In Sri Lanka there is no profit in the end when we compare income and expenses. As a country we have so far been unable to properly figure out a clear policy as to whether we should continue as an agricultural country or an industrialized nation. If we take the agrarian sector, even though there is a satisfactory level of production, the farmers have not received its benefits. So they too have been compelled to pay high indirect taxes. So the production has failed to give out any positive outcome.

On the other hand, unemployment numbers have soared during the past few years. This affects the unemployed community more. As apolitical party, the UNP is more prone towards a capitalistic economy. They want to follow the Singaporean model. But as a country Singapore has far better per capita income than us. On the other hand our social welfare system is also not performing well either.

Our education may be free but it has no proper standard. It is the same with free health care. In such circumstances it is not fair to increase taxes. Some of the goods we had considered to be luxury products in the past have now become ordinary items.

Imposing taxes without increasing production is a serious mistake. Paying off debts of the previous government is not an excuse for the new administration. It’s not the people who took these loans. For over a year we have not seen any direct avenues of income generation in this country. Since independence all governments have only blamed their predecessors without doing anything productive. It is still our political culture. So far, governments that can rectify these lapses have not been formed.

Although the government has requested the people to tighten their belts for a little longer, the undue expenses of the government have not ceased. Importing luxury vehicles is a good example.Some MPs have justified their demands by saying they use older vehicles registered in 2011. Compared to other vehicles in the country this is not old at all. In the end all these come down to the ordinary citizen who is compelled to cut most of his spending. It has now become impossible even to have three square meals. Can a labourer buy the necessary commodities from his salary? Then there are issues regarding the level of quality of these products. The people have done their part. It’s now up to the government to do theirs.

 

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Country not running on a production economy

Indika Liyanage, Chairman, All Island Traders’ Unions Collective

It is not because of VAT that the cost of living has gone up these days. Although VAT has been imposed on wholesale and retail businesses, so far no one has registered for VAT. During the past few years the US Dollar has gone up from 132 rupees to 148 rupees. There alone we can see an inflation of 12 per cent. Our country is not running on a production economy. Most of our consumer products are imported in to the country; around 98 per cent of the products come from outside. Therefore the changes in foreign exchange rates have an adverse effect on our economy.

Apart from this, the government has increased the salary of private sector employees by Rs. 2,500. But all that is added to the profits of the businesses. But they cannot live off the profits that they had in the past. So the prices of goods have to be increased. So far VAT has not been imposed on wholesale and retail goods. If that too is imposed, prices will go up by a further 15 per cent.

Customers are our lifeline. We can survive only if we can retain our customers. At the current rate I don’t think businesses would be able to hold on much longer. At present, the buying capacity of the people has declined. We are businessmen only during the trade. After that we too are customers like the rest of the general public. Only the politicians can escape from this. In the past only the big companies were taxed. But today even the innocent man who sells 10 lunch packets is also taxed.

We have discussed this with the President. Most of the ordinary businessmen do not understand the complex mechanisms of taxation. So we must have a simple method of taxing according to the turnover. We trust the President. He is well aware of the situation.  So we hope this would be solved soon.

3 Comments for “People Suffocating Under CoL As Ministers Continue To Party”

  1. Nalin

    The government must have PAYE for all. Hence they should introduce PAYE even at a lower rate for those who are not paying like government employees and some semi government employees and gradually make it equal to all.

  2. Taxes on Liquor and cigarettes are as follows: 1 bottle of arrack cost 1060/= tax 720/=
    I fag 35/= tax 25.20

    Let the Gov. let the people know how much is spend on 225 Ministers including cars. The masses will protest if they know this.

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