Well tax

Tuesday, 23 October 2012 00:00 - - {{hitsCtrl.values.hits}}

The impending tax on water wells has the Government divided, with the Irrigation Ministry and Water Supply and Drainage Ministry at odds over the best method to promote sustainable water usage. As for the public, they are more concerned with why the Government is not working to reduce water wastage rather than slapping more taxes on already tightened wallets.

Sri Lankans who dig traditional or tube wells to obtain water for drinking, agriculture, commercial, or industrial purposes will have to obtain an annual permit from the Water Resources Board (WRB) at fees ranging from Rs. 7,500 to Rs. 15,000, according to the proposed regulations.

According to the new amendments, prior approval would be required to dig agricultural wells with a diameter of more than 12 feet, water projects for domestic use of few families, tube wells for domestic or agricultural purposes, water projects for drinking water bottling plants, natural or ground water resources utilised for soft drinks or related industries, and the use of natural or ground water resources for industrial purposes such as car washing or laundry services.

The new laws will also apply to State, semi-Government or private establishments and prior registration issued annually by the WRB will be required for the use of water for whatever the purpose might be.

However, the public will be rightly irate by the demand for more taxes when the NWSDB has done little to reduce water wastage. The new measures could also deeply impact the poor and rural farmers, which is one reason why Water Supply Minister Dinesh Gunawardene has opposed the move.

A recent report by the Finance Ministry has said that non-revenue water at the State-run National Water Supply and Drainage Board in the Colombo city is about 31.3 per cent in 2011 and it is 25.1 per cent elsewhere.

Earlier in the year NWSDB made Rs. 1.9 billion operational profit with higher revenues and a slight decline in non-revenue distribution. The Central Bank’s Annual Report said Water Board has given 95,728 new connections in 2011, growing total connections 7.1 per cent to 1.4 million.

Revenues had increased by 11 per cent to Rs. 13.8 billion, while operational and maintenance cost had declined nine per cent to 11.9 billion, resulting in a Rs. 1.9 billion operational profit. The Water Board made a large loss in 2010 partly due to a revaluation loss.

High level of losses has been a result of decayed pipelines, consumption of water by families of underserved settlements through public water outlets, illegal water users through tampering of meters and operational shortcomings.

Yet regardless of these issues the Government is preparing for an easy way out when it presents the latest proposal to the Cabinet. Earlier this month water bills were increased yet again with the Government introducing an unusual policy wherein the lowest consumers were forced to pay the highest amount of as much as 60 per cent.

Water is usually considered to be a plentiful substance but as the prolonged drought proved this year, such complacency cannot be allowed. Moreover, increased taxation will not result in the sustainable use of water with more people looking to tap into piped water through illegal means and it would have a detrimental impact on urban and rural agriculture.