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Saturday, 16 March 2013 00:44 - - {{hitsCtrl.values.hits}}
By Uditha Jayasinghe
In an alleged move of rolling back financial accountability, the Government is introducing new laws next week to pave the way for large casinos to operate, extend the time limit to address debt, and remove taxes on foreign purchases of land, which the main Opposition yesterday criticised as being opaque and leading to the moral downfall of the country.
Main Opposition United National Party (UNP) MP and economist Dr. Harsha de Silva told media that the Government’s hurried plans to amend 21 Acts including the Betting and Gaming Act, Finance Act and Strategic Investment Act in Parliament next week lacked transparency and allowed too many tax concessions.
Dealing with three key topics, Dr. de Silva pointed out in 2006 the UNP Government had targeted debt to GDP ratio to be reduced to 60% by end 2013. However the Government by amending the Fiscal Management Responsibility Act will extend this period from 2013 to 2020.
He accused the Government of misleading the people by outlining plans in the Budget 2013 to reduce loans taken by the Government but pointed out that guarantees were being provided to raise loans from State entities.
Reading out from a long list, the MP tagged Lakdanavi, CEB, CPC, Mihin Lanka, SriLankan, Road Development Authority, Petroleum Storage and Urban Development Authority (UDA) among the Government entities that are taking loans from State and private banks under guarantees provided by the Government.
“These are all State companies that haven’t made a cent in profits for years. How can they pay back these loans? With the Government guarantee, taxpayers will be burdened with repaying these exorbitant loans. Mihin Lanka has borrowed Rs. 1.4 billion and SriLankan Rs. 23 billion.”
He further revealed that National Savings Bank (NSB) has signed an agreement to borrow US$ 1 billion from two international banks and questioned how it would be repaid. He also pointed out that NSB was the only bank in Sri Lanka where the Government guaranteed every cent. “This way the Government can pretend that loans are reducing but off balance sheets are growing. Right now the Government can only provide guarantees amounting to 4.5% of GDP but under the new amendment this will be extended to 7%. ”
The MP also argued that the Government plans to encourage casinos by providing exemptions on a plethora of taxes including 12% Value Added Tax (V.A.T) and 3% Nation Building Tax (NBT). Instead the Government will only impost a 5% levy while any casinos with revenue under US$ 1 million will be exempt from all taxes or levies.
He also questioned as to why casinos have been included in the Strategic Development Act, which is only meant for projects that promote social and economic welfare for the entire population. Given the moral risks, he even called on the Bodu Bala Sena (BBS) to pay attention to such steps taken by the Government.
Plans to fast-track casino investments come after Australian billionaire gaming mogul James Packer visited the country in mid-February to explore prospects for a mega gaming venture in Sri Lanka.
“What these special projects are supposed to do is they are supposed to significantly enhance the social and economic benefits of this country and what is being done with this legislation is to invite casinos and gaming operators into Sri Lanka under the Strategic Development Act. So what happens under this Act is that these people are given enormous tax benefits, some as much as 25 years of tax exemptions. I must also say that out of the nine casinos operating in Colombo, only five are registered, as was revealed at the Consultative Committee Chaired by the Commissioner General of Inland Revenue. So is this the equitable tax distribution of this country? When you charge Rs. 85 on a tin of canned fish, when you charge Rs. 28 on a Rs. 100 re-load for a phone, why don’t they register the large casinos in the city?”
Dr. de Silva charged that it was unfair to give massive tax exemptions to lucrative businesses but tax every item essential for the poor.
He also criticised moves by the Government to exempt 100% taxes on foreigners buying land in Sri Lanka.
Under an amendment to the Finance Bill, the Government removes the section that demands non-citizens to pay 100% of the land value when they make a purchase.
“If these are the future policies of the Government, they must clearly state it rather than trying to rush bills through Parliament. This is especially crucial since people cannot appeal to the Supreme Court to change a law once it has been passed,” he added, pointing out that under these circumstances, previous Government announcements to end sale of land had proved to be fallacies.
