ISSN: 1391 - 0531
Sunday September 9, 2007
Vol. 42 - No 15

Alarm rings on CoL

By Malik Gunatilleke

Public concern over the rising cost of living in Sri Lanka is bound to further increase with the government slapping additional taxes on imported goods including utility items while the price of gas, fuel and food stuff have continued to rise during the past few months.

The most recent burden heaped on the public is in the form of increased subscriber levy and the additional tax on mobile phone users in the country. Mobile phone subscribers will now have to pay a levy of 7.5% on the total call charges in addition to a monthly fee of Rs. 50. The 7.5 % is an increase from the existing 2.5 %.

People showing their anger at the increase in gas prices

With the increased taxes on mobile phones, the government expects more than Rs. Two billion in revenue and the new taxes on imported vehicles and other consumer items are expected to bring in an additional Rs. Six billion.

Trade and Consumer Affairs Secretary R.M.K. Ratnayake told the Sunday Times that the public had misunderstood the government’s reasons behind the introduction of these taxes.“The reason for adding these taxes is simply because in the past we had lost more than Rs.10 billion by granting various concessions on commodities,” he said.

Dr. Ratnayake said the government failed to foresee the steep world market increases in the price of fuel and was forced to increase taxes as a means of recovering some of the massive losses. But adopting this method to balance the government’s Budget, the already burdened consumers will incur more expenses when considering the increase on gas, electricity, communication and transport.

The JVP affiliated All-island Trade Union Federation Secretary P.C. Wijeynayake said the union believed the government’s lack of planning during the pre-budget period had caused it to pile this kind of back-breaking burden on the people.

“The innocent public is now in a position similar to that of a red onion because once they pay out extra monies as taxes there will be nothing left of their salaries. The increased bus fares, electricity tariffs, petrol, diesel, kerosene, gas and phone bills will put the people under immense pressure,” he said.

Mr. Wijeynayake said though the cost of living has increased at a rapid pace over the past few months, the salaries of private and public sector workers remained static. He said Sri Lanka’s tax driven and mainly import based economy is on the verge of collapse especially with the value of the rupee having taken a sharp plunge when compared with the dollar.

“This situation does not directly impact on the workers who survive on commissions but mostly on those who receive fixed amounts as salaries, which does not increase all that often,” he said.

The ATUF is asking the government to give the public and private sector workers an immediate salary increase of at least Rs.3000 or provide them with a monthly allowance to cope with the rapidly rising cost of living. Mr. Wijeynayake said government ministers did not care for the plight of the people as the ministers were provided with various allowances for fuel and other utilities including a monthly rent allowance of Rs.100,000.

He said if the government failed to take any meaningful action to resolve this recurring problem, the ATUF would have no alternative but to take strong trade union action to pressurise the government. Meanwhile, Dr. Ratnayake said increasing salaries is no solution as it would only provide more of an impetus for the rise in the cost of living.

“Increasing salaries will increase spending which in turn will rebound on the prices of goods. The government has reduced taxes on many vital food items in the recent past but we cannot reduce it further as then our farmers will be affected,” he said. Dr. Ratnayake said the government was controlling prices on items such as sugar, red lentils, canned fish, big and small onions, potatoes and dried chilies.

He lamented that most parliamentarians were not sufficiently knowledgeable enough to educate the people on the uphill task the government has to grapple with. Dr. Ratnayake added that the government could not increase salaries in a haphazard manner to counter the cost of living but should adopt more far sighted measures if it is to help the local market and cushion the effect of the rising prices.

However, the Colombo Consumer Price Index presented by the Department of Census and Statistics (DCS) showed the inflation rate for the month of August as having risen by 6.5% when comparing with the corresponding period last year.

Census and Statistics Director D.C.A. Gunawardena said even though the rate of inflation had risen, a decrease of Rs. 87.48 could be seen in the monthly expenditure based on a basket of items This is calculated by taking into account the prices of many essential items used in an average household. The report states that the price decreases could be mainly attributed to the surge in the seasonal supplies of consumer goods, such as vegetables, to the market.

The government’s recent implementation of the new pricing formula for LPG had resulted in last week’s steep increase in the price of Shell Gas and this week in the price of Laugfs gas. The price of a cylinder of Laugfs gas rose by Rs.188 on Thursday after the Supreme Court permitted Laugfs Gas Lanka to increase its gas price after the company filed a fundamental rights petition against the Consumers Affairs Authority.

The price difference between a cylinder of Laugfs gas and that of a cylinder of Shell gas is Rs. 50. Laugfs Gas Ltd. Chairman W.K.H. Wegapitiya said the move to increase Laugfs gas prices was to remain competitive in the local market especially after the increase in world market prices. The ATUF Secretary said the price hike in gas prices had now restricted people from even enjoying small pleasures like a cup of plain tea because of the impact gas prices would have on food items.

“Even preparing food at home has become an unbearable burden due to the government’s lack of proper planning,” he said. The difficulties facing the consumers do not seem to end any time soon as world market prices of fuel has shot up again by more than 8.5% within the last ten days.

Ceylon Petroleum Corporation chairman Ashantha De Mel told the Sunday Times that in the space of little more than a week world market prices of diesel had increased from US$ 82 a barrel to US$ 87 while petrol had risen from US$ 72 to 80. Kerosene prices had also increased to US$ 84. However, consumers may not be burdened by these increases in world market prices just yet with Mr. De Mel saying the current pricing on fuel would be sufficient to prevent an immediate increase.

“We were to reduce prices at the end of August due to a fall in the world market prices the previous month, but due to the hurricane season the world market prices shot up preventing any price reduction,” he said. Mr. De Mel said the volatility in world market prices might force local price increases in the future if the upward trend in world prices continues.

This relief period for fishermen has also come to an end with the concessions granted by the government ending in August. At a news conference on Thursday Media Minister Anura Priyadharshana Yapa said that instead of the monthly concession of Rs.4000 granted to 16,036 fishermen the government would guarantee stable prices on fish caught locally.

He said some the 642,000 Samurdhi beneficiary families using kerosene would be granted a monthly concession of Rs.100 for kerosene costing the government Rs.64,200,000. National Fisheries Solidarity Movement president Herman Kumara said the government’s efforts were in no way satisfactory as the current policy would not improve the lives of Sri Lankan fishermen.

“There are more than 80,000 fishing families in Sri Lanka and the government provided fuel concessions last month only to a handfull of fishermen on the West coast. We need a long term plan on fuel concessions because fixed fish prices are not enough to curb the current dilemma we face,” he said.Mr. Kumara said a group of more than 2,000 fishermen were due to hold a protest rally in Colombo on September 12 to demand for a restoration of the diesel subsidy for all fishermen in the country.

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Copyright 2007 Wijeya Newspapers Ltd.Colombo. Sri Lanka.