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From left: SJB MPs Eran Wickramaratne, Kabir Hashim and Dr. Harsha de Silva - Pic by Lasantha Kumara
Samagi Jana Balawegaya (SJB) MP Kabir Hashim said the new proposed tax policy is a death sentence to various groups including small and medium-scale enterprises, the local business industry, the export industry as well as private sector executives.
According to Hashim, the new policy will deal a death blow to the local production industry. “They are attempting to sign off on a death sentence to many,” he said.
Hashim made these comments during a joint press conference held in Colombo yesterday along with SJB MPs Dr. Harsha de Silva and Eran Wickramaratne.
“It is evident that no analysis has been carried out regarding this new tax policy as to what can or cannot be done in the economic environment of this country.
For example, while a 36% tax has been levied on top-tier earners, taxes on SMEs have been increased from 14% to 30%.
“A similar increase has been announced to those involved in the export industry,” he noted. “But at the same time, an Indian company was given a special tax relief last week, claiming it was a strategic development tactic,” he added.
Noting that taxes on locals such as IT professionals earning in dollars have been increased, Hashim said foreign investors have been granted tax reliefs. “Where is the consistency in this process? Is there any fairness?” he asked. He also questioned the Government’s intention to levy taxes on certain top-tier earners such as private-sector executives to apply retrospectively. “It is questionable as to how practical this is,” Hashim said.
Noting the various obstacles faced by SMEs recently with the inability to import inputs due to the forex crisis as well as the increased costs, Hashim said it is unclear if the Government understands its true responsibility. “The IMF is a facilitator. The Government need not agree to all of its conditions. These are up for discussion. Not all of their policies work for our country,” he said.
“It is the Government's responsibility to find out how we can reduce public expenditure, increase revenue, identify the areas of revenue generation and how to do it in a way that does not hinder our national production. But the Government has failed in this task. It has done this kind of analysis in an informal manner without recognizing the situation on the ground,” he added.
Hashim accused the Government of blindly following all proposals made by state sector officials and the IMF which will eventually destroy the country. “There is no political leadership to take necessary astute decisions,” he said.
According to him, instead of widening the tax net, those who are already paying taxes are being burdened further through the proposed reforms. “Theoretically, it could have been done without hurting our industrial sector, the local production sector and regular taxpayers. Therefore, our opinion is that the tax policy brought by this Government without any proper analysis or into the ground situation is unjust and will be a failure,” he predicted.
SJB MP Eran Wickramaratne expressing his views at the press briefing said major reforms in income and expenditure are needed to address the current economic crisis. “Considering State-owned enterprises, the loss during 2021 is Rs. 286 billion.
“By the second quarter of 2022, this stands at Rs. 968 billion. Waste, corruption and fraud are all part of this loss. A company’s sole intention is to generate a profit. But who will be answerable for the major losses suffered by these Government enterprises?” he asked.
According to Wickramaratne, the SJB has formulated a process to be implemented to address these issues if it comes into power. “We can divide these state institutions into three categories. There are certain enterprises the Government must invest in. On the other hand, there are those suffering losses that are not beneficial for the people. Some enterprises can be developed utilising the PPP model. Others can be fully privatised,” he said.
“It is better to privatise than allow them to suffer losses under politicians in this country. There will be no corruption. It will produce, generate jobs and make profits,” he added.
Wickramaratne said the SJB will also ensure only the most suitable candidates are chosen to head these organisations. He assured the party will eliminate political appointments and create independent institutions able to work without fear or favour.
Also addressing the press briefing, SJB MP Dr Harsha de Silva said economic reforms must be implemented in a manner that does not destroy small and medium-sized enterprises. “There is no point in an operation being successful while leaving the patient dead,” he said.
Recalling that he along with others called on the Government to seek help from the IMF as early as 2020, de Silva said instead it was done when the situation had reached the most critical stage. “The group including P.B. Jayasundera, Ajith Nivard Cabral, Basil Rajapaksa, Mahinda Rajapaksa and Gotabaya Rajapaksa discarded Mangala Samaraweera’s tax policy and claimed they will reduce taxes.
“They scrapped the payee tax resulting in a payee tax reduction of 94%. They printed currency instead of raking in taxes and wasted it on useless projects. The Government created a mirage of prosperity before the people,” he said. “We warned this would lead to inflation and the devaluation of the rupee but they denied it at the time,” he added.
According to the SJB MP, the proposed unilaterally decided tax reforms must be discussed at length and they must be analysed for their impact in parliament. “They must be presented to the Finance Committee and then presented to Parliament,” he said.
While noting that currently, an Executive President may do as he wishes, de Silva said the Government must not violate human rights if a people’s uprising occurs due to these ad hoc decisions. “We have stressed that reforms must be brought forward in consensus with the general public. Any attempt to implement these forcefully will backfire,” the MP warned.
“We do not intend to engage in cheap politics. We too believe that the country will have to suffer much to come out of the crisis caused by the Rajapaksas. But that process must not happen by sentencing the people to death,” he added.
