ECONOMYNEXT – Sri Lanka’s opposition did not oppose increases in spending on several activities in a recent supplement to the vote-on-account but only the raising of the debt ceiling, opposition leader Sajith Premadasa said.
He claimed that the government asked for a large increase in debt of because taxes were suddenly cut and it ran out of money.
“The opposition was willing to support the supplementary expenses on development projects,” Premadasa told reporters in Colombo.
“We proposed an amendment to the vote-on-account which supported the allocations but we objected to raising the debt ceiling.”
“But the government withdrew both sections of the motion and are trying to blame the opposition.”
Ruling party ministers have blamed Premadasa for the inability to settle contractors before the upcoming New Year.
Premadasa rejected the charge, labeling it ‘hilarious’.
There was already provision in the vote on account to pay contractors but the opposition did not oppose the increases proposed, he said.
He said the government had got into trouble by suddenly cutting taxes and losing hundreds of billions of rupees in revenues.
Asked why the opposition did not at least support an increase in debt which matched the expenses proposed, he said the government should be able to manage its finances within the debt limit, and many allocations in the vote-on-account were cut giving room to re-allocate expenses.
He said a salary hike of 15,000 rupees to executive officers, pensions increase which cleared anomalies of recently retired state workers and 3000 rupees to 24,000 rupees in increases to state workers proposed by the Ranugge, salary commission were abolished by the new administration.
“The Gamperalia and Enterprise Sri Lanka program was also stopped,” Premadasa said.
“There are savings made from these cuts to pay contractors. The taxes were cut irresponsibly. But have they brought relief to the people? Where did the money go?
In Sri Lanka value-added tax is not required to be put on the bill to customers unlike in countries where the system works well.
As a result, producers do not quote the prices of goods and services net of taxes, except at restaurants.
When value-added tax was raised by the last administration, producers also raised prices to the nearest round number, and analysts called for the law to be regularized to international practice.
The legal blunder dates back the 2001-2004 administration where the original GST tax was re-named VAT and an attempt was made to hide taxes from the public, critics say. (Colombo/Feb24/2020)