If Finance Minister Ravi Karunanayake can recognize his own Budget proposals when it comes to the final vote on December 19, he could consider himself lucky. Such are the pressures on him from various quarters to cut and chop, and amend, his original suggestions, notwithstanding the fact that the Government received a two third majority [...]


Donor in Business Class, Recipient First Class


If Finance Minister Ravi Karunanayake can recognize his own Budget proposals when it comes to the final vote on December 19, he could consider himself lucky. Such are the pressures on him from various quarters to cut and chop, and amend, his original suggestions, notwithstanding the fact that the Government received a two third majority vote in Parliament last Wednesday week at the vote of the second reading. That the vote came amidst a doctors’ protest strike, trade union action being contemplated and the entire public service up in arms showed an increasing disconnect between the recently elected legislators and the people.

The Minister’s initial attempt to replace the indirect tax VAT came a cropper even before it was conceptualized. He blames it on the IMF. Since he presented his 2016 Budget he has been plagued with resistance. First to protest was the President himself. Having approved it for presentation, he later called and wanted the lowering of the beer tax dropped. Three wheeler drivers protested the emissions tax and big business is complaining of the doubling of the Nation Building Tax despite the end of the ‘war’, but none so much as the state doctors (GMOA) and the administrators (SLAS) on the Minister’s proposal to slash the Duty Free vehicle import perk given to that select band of “public servants”.

Once a concession is given it’s nigh impossible to have it revoked; certainly not without the beneficiaries shouting and screaming. That the benefit given was abused no end and successive Governments turned a ‘blind eye’ has finally caught up. The former President “by special order” alone imported 211 vehicles on this permit scheme. The people do not know for whom. The loss in revenue to the State coffers from 2012 to 2015 due to this permit scheme is a colossal Rs.147 billion.

Honourable Members of Parliament were in the lead in exploiting this facility. The scheme was meant to provide a vehicle for law-makers to travel to and from and within their constituencies, and altruistically, to ensure MPs did not take bribes to purchase a vehicle. But the Government knew that MPs freely sold their permits and pocketed the cash as they already had vehicles of their own. The permit was just another cash voucher. For an MP who averaged Rs. 15 million to get elected (some were reported to have spent as much as Rs. 300 million) according to election observers, this was a drop in the ocean. Thereby, the Government thus gave tacit recognition to blatant corruption.

Doctors and public servants followed the MPs’ bad example. No doubt, some, given their pathetically low salaries and the high duties imposed by the state on vehicle imports just could not afford a vehicle. This country has a terrible record of remunerating its public servants. Many honest and hardworking doctors and lawyers, judges, diplomatic officers, administrators and university professors can only grin and bear. The National Salaries and Cadres Commission has not made substantive recommendations since 2006, even so, their recommendations are hardly implemented.

The abuse of the duty free permit scheme benefited non-public servants who already had more than one vehicle and mostly the car retailers. The state was the loser. Huge sums were being drained in foreign exchange to buy these vehicles – a total of 35,963 vehicles have been brought to the country under this permit scheme in the past five years (231 by MPs) adding to the severe congestion on roads. Last year alone, 429,000 vehicles were registered in this country of which private cars numbered 38,000. The numbers are staggering.

Not that these public servants were always ignored. Governments tried in various ways to help them make ends meet and maintain a certain quality of life in keeping with their status as professionals. In the early 1980s they were afforded the luxury of not having to pay income tax on their salaries. Many public servants were also allowed to use their official vehicle for private use. They have conveniently forgotten they are the beneficiaries of Free Education which is funded by the revenue collected from taxes. In an economically developed country like the United States, professionals keep paying back their student loans taken when in University. There is a price tag for everything.

Consultant doctors today get a salary and allowance totaling a modest Rs. 77,000 a month but they are allowed private practice. Customs officers receive incentives over and above their monthly remunerations when they nab smugglers. Inland Revenue officers are given similar incentives. Even then, greed has consumed many as witnessed by the numbers getting caught in fraudulent activities. From the traffic cop on the street and the OIC at the police station up to Cabinet Ministers, Sri Lanka has become a country where bribery and corruption are endemic irrespective of whatever financial benefits are given to public servants, especially those who have the authority to impose laws and fines.

In this backdrop, for a Member of Parliament to work behind the scenes to win back this lost concession of a duty free vehicle permit is pathetic. The Parliamentary Affairs Minister went on record saying that streams of MPs, from all sides of the House, besieged him to change the Budget proposal. When the Finance Minister introduced this cut, he justified it by saying “even MPs will lose this perk”. Now, he’s burning the midnight oil at the Treasury with his officials to see how to pacify them and still balance his Budget. No wonder other public servants are up in arms. The political leadership of this country is expected to be an example. Already, a massive Cabinet is the worst possible example for streamlining an over-sized public service. Complaining of a gigantic public service that is a burden on the state while maintaining a jumbo cabinet is double-speak.

Forced to back-pedal on several of his proposals, the Finance Minister is reported to be working out a cash grant in lieu of a vehicle permit. Issuing a permit once every five years has to be reviewed. So too the exorbitant duty levied on the import of vehicles which makes one out of reach for most public servants. Reducing malpractices at the Customs by the under-valuation of vehicles by importers will see the state gain more revenue. This would at least save on foreign exchange and ease the burgeoning vehicle population that has resulted in the chaos on the roads today. The proposal to give cash grants for the fertilizer subsidy and coupons for in lieu of school uniform are all subsidies that help the beneficiaries, but the words of the Singaporean Prime Minister Lee Kuan Yew, a close Sri Lanka watcher when he was building that city-state ring true all the time. “Your democracy,” he famously told President J.R. Jayewardene “is a periodic auction of non-existent resources”.

Sri Lanka claims to be a middle-income country but it lives on foreign loans, aid and the USD seven billion sent by our workers in West Asia. The country is living beyond its means. An ambassador of a country that gives aid and concessionary loans to Sri Lanka related how he (the donor) was travelling Business Class on a Colombo-bound flight and saw a Sri Lankan MP (the recipient) travelling First Class on the same aircraft. The irony of it all was not lost on the envoy.

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