Trade unions launched their strike against the Government this week on a combo of issues from elections to electricity tariffs to taxes lest one of them was not enough to draw the workers out onto the streets. They paid little heed though to their obligations to pull the country out of the economic abyss it [...]


Unions bark; Caravan moves on


Trade unions launched their strike against the Government this week on a combo of issues from elections to electricity tariffs to taxes lest one of them was not enough to draw the workers out onto the streets. They paid little heed though to their obligations to pull the country out of the economic abyss it is in. It is all about rights, not duties. And one might say, ‘it was all sound and fury signifying nothing’ that would help bring that extra dollar to the economy.

With the IMF green light flashing for a bailout, the gasping economy will get some oxygen when Sri Lanka will be able to once again access foreign loans to tide over its immediate difficulties – only to keep borrowing, of course, for the next generation to settle the loans later. The quid pro quo is for Sri Lanka to submit to an IMF programme for economic reforms, among which is a move to shore up domestic revenue to finance its expenses one way or the other, and one way being by way of taxes.

Political analysts can decipher how many who took to the streets on Wednesday actually pay direct taxes. Some in the private and banking sectors have to pay not more than Rs. 1,000 in new taxes, but complain and walk out of their workplaces under union pressure and mob mentality.

The new culture is tax avoidance. Either by way of ‘cash only’ or not issuing a bus ticket, the name of the game is to avoid the tax man. And what of the Inland Revenue Department (IRD) tasked with collecting Rs. 1.6 trillion? Only last week, this newspaper published a damning report by the Auditor General of the deficient online system for tax collection that has so far cost Rs. 10 billion – the cost of holding the local government elections, and how those targets of Rs. 1.6 trillion are unlikely to be met.

Why? Because a Revenue Administration Management Information System, commonly called RAMIS, the online platform introduced in 2014 during the Presidency of Mahinda Rajapaksa, reeks of corruption. RAMIS is not working optimally. Contractual details are missing, and the astounding excuse trotted out is that the IRD signed an agreement with the Singaporean firm that provided RAMIS not to divulge the details, a matter the Auditor General says is unconstitutional.

As a result, the IRD is handling some 700,000 files manually, an ideal recipe for bribery and corruption. Rs. 500 billion is overdue in taxes. The Social Security Contribution Levy effective from October last year, and the Withholding Tax do not even have separate units at the IRD. Tax compliance which was 85 percent in the past had dropped to an all-time low of 45 percent in the absence of a robust follow-up system, in addition to bribery and corruption.

The burden of new taxes imposed on the protesting public can be eased and the IMF programme better implemented if the IRD systems are in place. The State Minister of Finance giving mere directives to the IRD this week to chase after professionals for not paying their income tax is a meaningless and fruitless exercise unless the IRD and the Finance Ministry turn the searchlight on the IRD itself, and see what is going on in there, and has gone on in there, in recent years.

A new northern war

With the United Nations trying to hammer out a treaty to stop over-fishing in the high seas, Sri Lanka’s northern fishermen threatened to take to the roads earlier this week as the seas where they ply their trade seem to be out of reach. Their grouse: the Government is on the verge of totally capitulating to persistent efforts by India to allow its fishermen ‘entree’ into Sri Lanka’s territorial waters – next time legally.

Though the Sri Lankan Government does not seem to appreciate the fact sufficiently, this is what the Tamil Nadu Fisheries Department says of these waters; “The Gulf of Mannar region at the southern tip of Tamil Nadu is recognised as the richest marine diversity in the world”.

But not for long. Armadas of over 1,000 mechanised boats from south India brazenly violate the IMBL (International Maritime Boundary Line) separating Sri Lanka and India to engage in illegal fishing techniques such as bottom-trawling destroying even the plant life. They swoop up tiger prawns, shrimp, squid, sea cucumber and demersal fish varieties, slowly but surely turning the entire region into an oxygen-starved ocean desert. The Tamil Nadu State Government is the biggest winner netting in over a billion dollars worth of foreign exchange with this catch as India’s fourth largest fish products exporter.

The IMBL was skilfully negotiated by officials of the Ministry of Defence and External Affairs in the 1970s. The current dispensation is handing over these hard-won gains of Sri Lanka’s sovereignty over these waters on a platter – a seafood platter.

The present Indian negotiators seem to have got the better of their Lankan counterparts hamstrung by weak-kneed politicians at the helm in Colombo, and the deafening silence of northern politicians beholden to India. Today’s issues have been deftly converted to a ‘humanitarian issue’ of livelihoods, but it is the livelihoods of the Indian fisherfolk. India has not hesitated to use Sri Lanka’s economic crisis to seize the moment to push for an advantage in these troubled waters. The outstanding issue has been downgraded from a Government-to-Government issue over territorial waters between two sovereign states to a fishermen’s union matter.

The visit of India’s State Minister for Fisheries ostensibly to declare open the Jaffna Cultural Centre donated by the Indian Government has ensured that this new proposal to issue licences to “small boats” from India to exploit the northern waters on Sri Lanka’s side is now on the table.

The Sri Lankan Fisheries Minister denies a decision has been taken, but is silent about a proposal being mooted. Informal discussions are to continue among fishermen’s unions at the annual Kachchativu festival this week. Sri Lanka once upon a time issued fishing licences to foreign companies, mostly Chinese, to drop anchor in the southern seas. It proved an ideal licensing scheme for Ministers of Fisheries and officials to make some money from land.

Now, it is the north, with even greater consequences. Legalising an illegal operation which the country does not have the capacity to monitor, will surely compromise this country’s national security, open the doors even wider for smuggling, and be the coup de grace for the long-suffering northern fishermen.

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