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Saturday May 15th, 2021
Economy

Sri Lanka PM slams key businessmen, says firms should gain wealth from competition

COLOMBO (EconomyNext) – Sri Lanka wants businesses that can compete and grow and not those that amass profit from state patronage, with ordinary people taxed at high levels, Prime Minister Ranil Wickramasinghe has said.

He charged that the Rajapaksa administration ran a ‘greedy spirit’ (pretha) style economy that taxed ordinary people at high levels.

The new administration brought down steep food taxes which were imposed by the last regime in a bid to create self-sufficiency which critics say is a failed textbook autarky-style strategy practised in Germany up to the end of World War II.

Other protectionist taxes that keep prices of goods in Sri Lanka above that of the rest of the world. Amidst a massive increase is salaries to state workers in the new budget these taxes are still in place.

"The pretha economy had a witch-doctor and temple minder, and you all know them – P B Jayasundera and Nivard Cabraal," he told an appreciative audience of his party officials in Kandy, in Central Sri Lanka Saturday in pithy Sinhalese.

"There was also a quartet of gods (hatharawam devi waru). Sumal Perera, Nimal Perera, Dhammika Perera and Pathirage."

"When the ordinary people suffered, this quartet of gods protected the Rajapaksa economy. Various people started casinos and ethanol."

Wickramasinghe said the new regime will cancel a deal to involving a 15 acre land from a state dairy firm to one of them. He said casino projects have already been cancelled and Australia’s James Packer and he was not welcome in this lifetime (athmaya). (Sri Lanka’s new regime to cancel MILCO land deal)

Ethanol is a reference to tax-unpaid alcohol manufacture, which last week’s budget attempted to stamp out through a series of administrative and fiscal measures.

"We want good businessmen. The open economy in this country was created by the United National Party," Wickramasinghe said.

"I am labelled as the leader of capitalists and capitalism. We want an economy based on competition.

"There has to opportunities for people to earn. If people become millionaires though equal opportunity we have no problem.

"But if state resources are robbed and tax breaks are taken while poor people are taxed heavily, that is not an open economy."

"If anyone of you become a millionaire through your own strength I can only wish you well. If some who supported some other party also becomes a millionaire through his own efforts I also wish him well.

"But if someone from our party or some other party is stealing, we are not prepared to allow that."

He said ordinary the ordinary people cannot be taxed in a "capitalist" or "open economy". Those who had money had to pay to give benefits to others in a capitalist economy.

In a Mercantilist economy, companies make profits with state patronage especially trade controls. Sri Lanka had a controlled economy under the Dutch and British East India companies.

Most of the trade controls were dismantled by the British civil service especially after a report by W Colebrooke and Charles Cameron, unlike in India which remained the East India Company for a longer period.

But after independence from British rule, Sri Lankan rulers started to control trade, hurting ordinary people and making Sri Lank a lagging nation in Asia and the world. An independent civil service was also broken leading to a decline in rule of law and justice.

The current budget has also drawn concern over its retrospective taxation of large companies and the targeting of selected businesses by the new administration and the message it sends to foreign as well as local businesses (Sri Lanka’s finance minister defends controversial retropspective tax).

Update II

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