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5th April 1998

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Car prices down, consumer items up as GST takes shape

By Nadeeka Rathnamalala

Prices of many consumer items have gone up since the implementation of the Goods and Services Tax from April 1.

Despite claims by the Government that the new tax system which replaced the Turnover Tax would have no immediate impact on the people, a cross section of traders and consumers interviewed by 'The Sunday Times' said they were beginning to feel the impact of the new tax.

Items such as computers have gone up in price. With GST being imposed at 12.5 percent a flat rate for all items a computer which was sold for Rs. 100,000 last month will have to be sold at Rs. 112,500, Shirantha Wijeratne, General Manager of a computer firm said.

He said there would be a definite down turn in their sales.

Sriyan Wijeratne, manager of Datamini computers, is however optimistic. He said the impact of GST on the sales would be very little as the people got used to the new tax system.

While some private companies have made policy decisions not to revise prices others have decided to put the burden on consumers or share at least a portion of it with them.

Shamal Silva, financial director of the Stafford Motor Company, said they were compelled to increase the prices of motor cycles. He said they would face tough competition from their rivals, some of whom had decided to maintain the current prices.

According to Mr. Silva the prices of motor cars would come down slightly as the tax charged has been brought down to 12.5 percent from the earlier 18 percent.

Bicycles are among other items to go up in price. The price of a bicycle has gone up by about 500 rupees. The marketing manager of a leading cycle store in Colombo told The Sunday Times he felt it was a bad hit on the consumer.

He said while luxury items like cars had come down in price, the bicycle used by the poorest section of the society has become more expensive.

Last week one of our reporters was surprised to find out that he was charged a 12.5 percent GST on the Payphone card that he bought from a retail outlet. Many feel that some shop owners may misuse the new tax charging it on each and every item that they sell.

Many people expressed fear that the GST would escalate the cost of living.

Allaying such fears, the Deputy commissioner of the Goods and Services Tax of the Inland Revenue Department, P. Guruge said there would be no immediate effect on the prices of many essential items. Consumer products such as rice, flour, milk, potatoes, sugar and onions will be exempted from GST. In the services sector, educational services supported by government funding will be exempted. Public transport services and health care items will also be excluded. Kerosine, Diesel and Liquid Petroleum Gas prices will also not be liable for GST. The electricity consumption up to the 90th unit would also be exempted, Mr. Guruge said.

Despite general assumptions that the new tax has been introduced by the government to raise the revenue generated, the Inland Revenue Department describes it as a revenue neutral tax system where they say the government's income would not increase. However they admit there would be an initial shortfall of revenue until the system gets under way at it's full scope.


French tourist allegedly raped near Galle

By Imran Vittachi

A French tourist was allegedly raped by a lone assailant last Monday night at a beach resort south of Galle, according to police and forensic experts.

The accused, a 27-year old Unawatuna resident, forced the 49-year old woman to have sex with him, police alleged.

He had reportedly lured the French woman to the jungle-fringed beach at nearby Rannasala, offering to show her around, police said.

According to the area's chief forensic expert, Monday night's rape was only the second reported rape of a Westerner in Sri Lanka in 17 years.

"This is a genuine case of rape," said Professor Niriellage Chandrasiri, Dean of Forensic Medicine at Ruhunu University, upon examining the woman and suspect, who was taken into police custody on March 31 after she had complained and identified him to Habaraduwa Police. Scratch marks found on the woman proved that she had tried to resist, Dr. Chandrasiri added.

On Friday, the suspect was charged with rape and freed on bail at Galle Magistrate's Court. His release followed her testimony in a preliminary hearing that would resume on May 18, according to Additional Magistrate Ruwan Fernando.

The woman, who was scheduled to fly to France over the weekend, was no longer required to testify before the Magistrate's Court, he said.

But it remains unclear whether, in the event that the case should go to the High Court, she will have to return to Sri Lanka to face her suspected rapist on the witness stand.


"We did not bootlick the British" Ronnie

UNP frontliner Ronnie de Mel, embroiled in a slanging match with another frontliner Anura Bandaranaike says his family possessed and gave away mo+re land than any others and did not acquire anything by bootlicking the British.

In a hard-hitting statement relating to certain reports in The Sunday Times last week, Mr De Mel states:

Facts are sacred. Comment is free. Otherwise the freedom of the Press becomes "power without responsibility, the privilege of the harlot down the ages".

It is not a great achievement to own land or inherit land. I always consider land as belonging to the people to be used for the public good. That is why I supported the Land Reform Bill and voted for it and also the Paddy Lands Bill unlike some others.

My ancestors did not get their land free by "boot licking" the British and betraying the country and its people. My grandfather worked hard, had plumbago mines, exported plumbago in the last century and then planted rubber and coconut.

He had lands in Kurunegala, Madampe, Ruwanwella, Tebuwana, Moratuwa and various other places, including Colombo, some of which I inherited.

It is in one of these lands in Colombo known as Melwatta where he had his stores, several acres in extent, that my good friend Minister Nimal Siripala de Silva now lives in one of the sub-divided blocks.

My father-in-law the late Sir Leo Fernando who was a Member of Parliament till his death and also one of the founder members and chief benefactors of the U. N. P. also had over 5,000 acres of the finest tea and rubber in Sri Lanka which he also acquired by dint of hard work and entrepreneurial ability. But Glendon Estate, Neboda, one of the finest rubber estates in Sri Lanka, Puttalam Plantations and Walahamulla Estate in Kurunegala did not belong to my wife's family. They belonged to me and my family before the Land Reform Act.

My family has certainly surrendered much more lands under the Land Reform Act than perhaps any other family in this country - over 5,000 acres in all. There is also a vital difference.

(1) We did not sell any land after the Land Reform Bill was passed by Parliament.

(2) We did not try to oppose or sabotage the Paddy Lands Bill to deprive the poor farmers of our paddy lands.

Apart from the 5,000 acres of tea and rubber, some coconut and paddy, which we lost due to nationalisation, our family also lost some houses in Colombo, hundreds of buses and shares in Insurance and other Public Companies.

I supported all these measures although I lost a great deal of wealth personally. Strangely we also lost two Rolls Royce cars - a 1918 Model and a 1923 Model Rolls Royce exhibited by the C. T. B. was adjudged one of the best cars at a recent Rally of Old cars. It is worth several millions today.

We gave freely of our wealth to the people because we always consider wealth as a trust we hold for the people. We built temples, churches, kovils, schools, hospitals and houses for the poor with our own money.

We gave more than one hundred acres of our paddy lands to the farmers of Matugama and Bulathsinhala even before the Paddy Lands Act.

So we have also done our duty to this country without any distinction of race or creed and above all we have never betrayed it to foreigners.

At Page 8 of the same newspaper your correspondent "Epicurus" in his article "Outside Politics" under the title "Mel and Yells" states that I was greeted by the crowd with "some vociferous boos". Far from it.

Perhaps your informant was deaf.

I was cheered for fully 3- 4 minutes when I came on stage to commence my Speech. I had to appeal to the crowd to stop cheering so that I could start my Speech.

I was cheered at various other points in my Speech, but the loudest cheer came when I referred to the land sales of the Bandaranaike family and when I showed the people the Parliament Hansard referring to these 13 sales.

The crowd almost went wild with cheering and also jeering those who sold their lands in this way. The Leader of the U. N. P. Hon. Ranil Wickreme-singhe who was pre-sent throughout my Speech will testify to the accuracy and truth of this statement. Please make the necessary corrections in the next Editions of your "Sunday Times' newspaper to put the record straight.


Angry and restless

By Roshan Peiris

Ronnie de Mel after agreeing to give the Sunday Times an interview refused to do so. He seems an angry man with a chip on his shoulders. He even switched off my recorder. I had to rescue it from him saying we record most interviews today.

"I don't want to answer any questions on Anura's matter. I don't want to get involved at all. After all I am a man who has dealt with newspapers such as the Washington Post and Financial Times. I only want you to correct some misconceptions.

(Q) What misconceptions?

(A) I have made a statement where I stressed that my ancestors did not get land free by bootlicking the British (see statement).

(Q) Anyway, acknowledging all you have stated why did you start this whole hullaballoo with Anura?

(A) Because he barged in like a bull in a Chinashop.

(Q) But your moves have raised all sorts of speculations. The state media say you are angling to become the deputy leader of the UNP.

(A) I do not read the state papers and so I won't replay them.

(2) Mr de Mel turned his face away from the recorder and said" The trouble is that Anura thinks that we are slaves like those in the SLFP, like the Illangaratnas and Maithripalas who bowed their heads always. We in the UNP are different. We argue, discuss however controversial be it with Dudley, J.R and now Ranil.

"I am a de Mel and my type are not used to eating dankuda (crumbs) that fall from the main table.

"We gave freely of our wealth to the people because we always consider wealth as a trust we hold for the people. We built temples, churches, kovils, schools, hospitals and houses for the poor. We also gave more than one hundred acres of paddy lands to the farmers of Matugama and Bulathsinhala."

Mr de Mel gave the impression of a restless man for he spoke walking around and turning his face from the recorder. We wanted to remind him that he too had been one of the SLFP members who he Mr. Mel says, behave like slaves. But he gave us no chance and went on repeating like a manthram "I do not want to answer questions on Anura but please report what I have stated."


Will there be effective regulation of aviation industry?

Following the privatisation of Air Lanka questions are being raised regarding the ability of the aviation sector watchdog to effectively regulate the industry.

Sri Lanka ran into serious problems in regulation after Shell Gas was privatised as a monopoly by the Public Enterprise Reform Commission without a regulator in place.

Many analysts believe the Sri Lanka Telecom privatisation was conducted in a much more orderly manner by strengthening the regulator by making it an independent commission, giving it powers to rule against any operator without fear of reprisal.

When the UNP administration privatised Lanka Lubricants an existing monopoly was extended for several years after the sell off. Though the monopoly subsequently ended, Lanka Lubricants still had an exclusive distributorship agreement with Ceylon Petroleum service stations around the country. As a result importers of motor lubricants found their products did not reach the customer. Though such practices are clearly anti-competitive, the Fair Trading Commission has no power to outlaw the agreement at present.

The aviation industry is at present regulated by the office of the Director General of Civil Aviation.

"The office of the DGCA does not seem to have the unfettered ability to make independent decisions," says Ravi Karunanayaka, a pro-privatisation member of parliament who is critical of the manner in which Air Lanka was privatised.

Industry analysts say the record of the DGCA so far has not inspired too much confidence in its ability to make commercially just rulings, because the natural areas of authority of an aviation watchdog are being undermined by others, particularly defence authorities.

The domestic aviation industry has been virtually crippled due to restrictions on flying enforced by the defence establishment.

At the moment domestic passenger flying is banned except for the Jaffna Colombo run, for which approval is given by the defence authorities, and not by the DGCA.

As a result at least three helicopter operators have gone out of business. The premium end of Sri Lanka's tourist industry was also badly hit by the ban on domestic passenger flights.

Later training flights were allowed over Southern Sri Lanka, though inexplicably, passenger flights are still banned over the area.

Recently a new airline, Monara Air, was formed to fly to Jaffna, bringing welcome competition to an industry which was monopolised by Lion Air. But in another strange move Defence authorities cut one flight from the established carrier, as the security establishment claimed they were only able to handle four flights a day, effectively putting them both on the same footing.

Industry analysts say an independent DGCA would not have allowed the newcomer to operate 50 per cent of the flights while the carrier which developed the route was also allowed the same traffic volume.

There are fears that Air Lanka will dominate the office of the DGCA as Sri Lanka Telecom was accused of doing before the telecom watchdog was made into an independent commission.

However PERC Director General Mano Tittawella says the DGCA is legally empowered to act independently. Several changes are also on the way, he said.

So far Sri Lanka has had an aviation policy defined as "Open Liberalised Access." Mr. Tittawella says there are no clauses in the agreement with Emirates that would prevent the government from going for an open skies policy in the future." Emirates is used operating in an open skies environment, so competition does not frighten it," he said.

At present AirLanka uses only 33 of the 53 bilateral agreements allowing a domestic Sri Lankan carrier to carry traffic to and from another country. Some of these have been reserved for AirLanka as it has plans to open new routes.

Mr. Tittawella says the DGCA will have full authority to issue licenses to other locally owned carriers to use bilateral agreements that are not utilised by AirLanka.

"Even AirLanka is licensed by DGCA, and DGCA can cancel its licence if AirLanka does not comply with regulations," he said. However so far DGCA has not issued licences to local entrepreneurs though applications have been made. It still remains as a mere department of the Ministry of Aviation, much like the office of the Director General of Telecommunications was, until it was made into an independent commission.


Hey! your splits are showing too

From the Green Corner

By Viruddha Paakshikaya

Last week, my unseen 'friend' Paakshikaya, had taken upon himself the role of Match Referee and conveniently and deftly dropped the subject of corruption. Then, he swiftly moves on to a minor dispute - that argument between Anura B and Ronnie - in our party much like the proverbial drowning man grasping at a straw.

Paakshikaya obviously cannot carry on the defence of his partymen (and women) who are making hay while the sun shines, with naked acts of corruption, all in the name of transparency.

But I don't want to flog a dead horse. So, if Paakshikaya talks of 'splits' in our party, let us look at 'splits' on Paakshikaya's side also.

First, I am reminded of what our great leader Dudley Senanayake told Stanley Tillekeratne one day in Parliament when the latter was harping on splits in the UNP: "Yes, at your level, all you can see are splits.."

We in the UNP are democrats. Our differences are open for everyone to see. We have nothing to hide, unlike Paakshikaya's claim in the SLFP, and moreover in the PA. You call us the Dis-united Non-National Party.

If so, then you are the Some Peoples Alliance. (It can be pronounced either way: Some - Peoples Alliance or some People's - Alliance: Looking at what your energetic Sports Minister is doing we might even call it some Peoples Dalliance!)

It is very much like your predecessor, the United Front which had a Divided Back and the LSSP eventually got the boot in 1975. But now your splits must be even wider, with people like Mr. Mangala Samaraweera in your ranks! Paakshikaya, let me explain, before you draw any other conclusion.

First, of course, there is the Ashraff-Fowzie battle for the Muslim leader mantle. They who were at each others Fez caps are now at each others throats. They are descending to very much lower levels with each passing week.

Then we know of how Mangala Samaraweera and S.B. Dissanayake clashed for the hand of their beloved leader (Metaphorically, of course)

We also know of how your only two intellectuals, G. L. Peiris and Lakshman Kadirgamar are not even on talking terms. One is accusing the other of not supporting the package while the other is accusing the former of making a total mess of the package anyway.

We all know how the President was virtually blackmailed in late 1995 by G.L. Pieris and was forced to sack her Ministry Secretary A.S. Jayawardena, with the threat of refusing to present the Budget unless she did so. And, this all powerful Executive President, instead of dismissing the precocious political upstart, meekly gave in to the demands of her Deputy Minister. She thought she got her own back on him by appointing A.S. Jayawardena as the Central Bank Governor.

So, Paakshikaya, if you can quote pithy Sinhala idioms, so can I. That move by your President reminds me of the saying 'Bima wetunath ravule veli gevenna denne ne" - even if one falls, one must not get sand on your moustache.

It is not that your President has a moustache - though she maybe the only man in her Cabinet - but you know what I mean!

Surely, how could she have forgiven GL for that stab in the back - so like C.P. de Silva and her mother - or is it really that "what can I do without GL? syndrome?"

Then your 'splits" are not only at Cabinet level. I just returned from a trip to Kandy where we are organising our Party branches for the forthcoming Provincial Council Elections. Your Anuruddha Ratwatte and Lakshman Kiriella are the local version of Ashraff and Fowzie!

You, Paakshikaya, have the cheek to say there are those in our party who want to be Finance Minister, Foreign Minister , Prime Minister and that they are cutting each other's necks to get there.

You may rest assured, Paakshikaya that our Leader - our undisputed Leader - will attend to that at the right time. We don't want to be counting our chicks before they are hatched.

He is well aware that he has to first win a general election before forming a government and merely because there are some "catchers" hanging around him and maybe dropping names and designations, you maybe assured they will themselves be dropped at the right time.

But, Paakshikaya what about those wanting to be at least Prime Minister in your PA government? Poor Ms. Bandaranaike on her last legs as it were, is having to look over her shoulders for another C.P. De Silva to trample her foot. No wonder, she doesn't seem to get up from the chair she sits on - obviously she thinks there is someone waiting to sit on it if she leaves it vacant for too long!

Anyone can ask her whether her pain is in her aching foot or her aching heart that avaricious partymen are waiting - and waiting - and waiting!

Then Paakshikaya, you say you are happy that your discards (Anura and Ronnie) are causing problems in the UNP. We in the UNP are happy that our discards - Anuruddha Ratwatte, G.L. Pieris, Lakshman Kadirgamar, Fowzie and Ashraff - are doing the same in your party.

Paakshikaya, you seem to get some vicarious thrill in trying to sign off with a threat of "more later". You talk of UNP aspirants for Finance Minister, Foreign Minister and Prime Minister. Go ahead, for all we care.

But I too can sign off with a threat. More later, shall I say, about somebody you worship now as the saviour of your party; how she left it, disgusted with its leadership and formed their own party which soon came to be known as the Bahubootha Party, and how, when the civic rights of your current formal leader and Prime Minister were deprived, how the night of the long knives began and your SLFP was split into an SLFP (S) and a SLFP (M), one recognised by the Elections Commissioner and the other in possession of the Party Headquarters at Darley Road.

As for splits, Paakshikaya I think you blokes are the experts. I bow to that expertise!

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