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Tuesday May 28th, 2024

Sri Lanka trade unions call off “strange” anti-tax protest after PMD claims failure

ECONOMYNEXT – More than 40 state-sector trade unions in Sri Lanka called off a protest that disrupted the health and education sector largely after the Presidential Media Division (PMD) claimed that many sectors worked partially despite calls to bring the country to standstill.

The state-sector trade unions have called for a full-day protest on Wednesday (15) against the tax hike.

The government has raised personal income taxes to up to 36 percent to reach its revenue targets which is used to a bloated and inefficient state sector amid a call from the International Monetary Fund to reduce losses in the state-owned enterprises.

The island nation was compelled to pay 86 cents from each rupee it received from tax payers last year to sustain over 1.6 million public servants in government and semi-government institutions. According to official data, one government employee is there to serve every 14 citizens in a country with a 22 million population.

Most teachers did not go for work while state hospitals also saw absence of doctors and other health workers.

The latest tax hike brings doctors, health workers. employees at state-run Ceylon Electricity Board (CEB), Ceylon Petroleum Corporation (CPC), and port employees into the tax net for the first time.

“We hope to continue the protest against the tax hikes, because we have given them a timeline, and we are sticking to it. However, overall, the strike by the alliance has decided to suspend temporarily until next week because the President assured us to give a meeting to discuss,” Chamil Wijesinghe, the spokesman for Government Medical Officers’ Association (GMOA) told EconomyNext.

“The trade union action today was extremely successful. Apart from Cancer, Emergency, Kidney, Tri Forces and Mental Health Hospitals, all the other government hospitals in the nine provinces collapsed due to today’s actions.”

Channa Dissanayaka, the Ceylon Bank Employees Union president, said they will withdraw from the protest until next week after they receive a letter from President Ranil Wickremesinghe on the dates for the meeting.

“This was a strike that was preventable. If they at least gave the assurance for the meeting with the President two days before, then this would not happen.”

“All Schools Collapsed”

Joseph Stalin, the General Secretary of Sri Lanka Teachers’ Union said the strike was extremely successful in the education sector.

“100 percent of teachers supported and the education in all schools collapsed today. If the government does not answer our requests, then we hope to go for serious actions in the future.”

However, employees from many state sector institutions except in the education and health sector said they worked as usual though some had gone on leave.

“We are not on strike but we had less work at our office because of the strike at port,” an official at Sri Lanka Customs told EconomyNext.

The President’s Media Unit (PMD) said most of the state sectors worked despite the protests.

The PMD quoting top officials in each government institution said 20 trains had operated by 0800 hours in the morning, CPC had processed over 300 loads of 6,600 liter of petrol and diesel to maintain normal operations, CEB Shroff and Cashier Union operated as normal, most state banks operated as usual while state-run bus transport service also operated partially despite the trade union protests.

State Finance Minister Shehan Semasinghe said the recent tax hike was to have more emphasis on direct taxes and give relief on indirect taxes.

“What people are asking without knowledge is to increase the percentage of indirect tax. It affects the entire nation. And the most rich person as well as the most poor person will have to pay equal,” Semasinghe told EconomyNext.

Some government officials called the protest “strange” due to the demands of the state-sector trade unions – to reduce the progressive taxes.

“This is a strange protest. Teachers who have nothing to do with the tax hike are protesting on behalf of doctors who earn multiple times of a teachers’ salary and yet don’t pay taxes,” a Finance Ministry official told EconomyNext asking not to be named.

“There is a contradiction in this protest. If they want to reduce taxes, then they should also let the government know how their salaries should be paid. Nobody is thinking about how a government is paying their salary.”

“The protesters don’t know that they are being used by their own colleagues who want to reduce their own tax which is the source for the wage of lower grade officers.” (Colombo/March15/2023)

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  1. Mary Anne Perera says:

    This is true. It was a scam. It was not a protest for the benefit of the middle class and poor but for the richest of the rich who want to get richer.

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  1. Mary Anne Perera says:

    This is true. It was a scam. It was not a protest for the benefit of the middle class and poor but for the richest of the rich who want to get richer.

Sri Lanka president’s UNP proposes postponing elections by two years

The UNP party headquarters in Pitakotte/EconomyNext

ECONOMYNEXT — Sri Lanka’s United National Party (UNP) has called for a referendum to postpone both presidential and parliamentary elections by two years to extend President Ranil Wickremesinghe’s term to continue ongoing economic reforms.

UNP general secretary Palitha Range Bandara called on the main opposition Samagi Jana Balawegaya (SJB) and the leftist opposition formation National People’s Power (NPP) to support the move.

At a press conference on Tuesday May 28, Bandara said postponing the two elections would not be undemocratic as it would be the result of elected representatives in parliament passing a motion, followed by a referendum.

Defending the proposal, he recalled the controversial decision by then Prime Minister Sirimavo Bandaranaike to postpone elections in the 1970s, which resulted in the decimation of her Sri Lanka Freedom Party (SLFP)-led alliance.

Bandara said that all parties must understand that now is not the time for elections as the economy has yet to emerge from bankruptcy and that President Wickremesinghe must be permitted to carry out his reforms which have already brought stability.

The UNP’s latest statement is a far cry from its pronouncements as recently as last weekend that the presidential election would definitely be held between September 17 and October 18 this year, followed by the parliamentary elections in early 2025.

UNP spokesmen also boasted that Wickremesinghe would not only contest the presidential poll but would also win it.

Tourism and Sports Minister Harin Fernando told reporters that Wickremesinghe would definitely contest the election, in response to some speculation that the president may opt to sit out.

“I think President Wickremesinghewill himself reveal his plans next week or one of these days,” said Fernando.

“He will definitely contest. I said he would for sure. Not only will he contest, he will also win,” he added.

Labour Minister Manusha Nanayakkara concurred.

“President Wickremesinghe will definitely win the election,” he said, adding that the president has provided much relief and that the economy continues to recover having fallen to its lowest point. (Colombo/May28/2024)

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Sri Lanka reforms have started to yield positive outcomes: State minister

ECONOMYNEXT – Sri Lanka’s State Minister of Finance Shehan Semasinghe says reforms have lead to positive incomes, including an increase in reserves.

“The reforms have started to yield positive outcomes, reflecting significant progress in multiple areas. Sri Lanka’s gross official reserves have seen a significant increase, reaching USD 5.5 billion by the end of April 2024,” Semasinghe said on social media platform X (twitter).

“Additionally, the Sri Lankan rupee has appreciated by approximately 8 % against the US dollar so far in 2024. This will boosts investor confidence and enhances the country’s ability to manage external shocks and meet international obligations and enhance confidence on the economy.

“The appreciation of the rupee can help lower inflation and reduce the overall cost of living and make it easier for the government and businesses to service foreign debt, thereby improving our financial reputation globally. Further, will improve the trade balance by potentially reducing the trade deficit.”

Sri Lanka’s inflation was 1.5 percent in the 12-months to April 2024, measured by the widely watched Colombo Consumer Price Index, data from the state debt office showed.

The CCPI Index fell 0.8 percent, to 195.2 points in the month of April after falling 1.9 percent in March.

Sri Lanka’s central bank has been operating largely deflationary policy, since September 2022, except perhaps in December 2023, and also allowed the rupee to appreciate in the balance of payments surplus it created.(Colombo/May28/2024)

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Sri Lanka risks foreign retaliation over VFS visa deal

ECONOMYNEXT – The Maldives could take reciprocal action after Sri Lanka’s new system of outsourcing its visas, which requires the payment of “processing” and “convenience” charges of 26 dollars, even though the government does not collect any fees.

Maldivian authorities have reminded Sri Lanka of the long-standing bilateral agreement under which their citizens could travel freely between the two neighbours without any charges or bureaucratic barriers.

A one month stay is available without a fee.

Maldivians, who consider Sri Lanka their second home, often spend more than a month in the larger country, but are now required to pay 26 dollars to VFS Global, which has controversially been contracted to handle Sri Lankan visas.

“The Sri Lankan government will not charge a fee, but Maldivians still have to pay VFS after applying online for a visa,” a Maldivian government official said in the capital, Male. “This violates the spirit of our agreement.”

He said the new administration of President Mohamed Muizzu was taking up the issue with Sri Lankan authorities in both Male and Colombo.

In a worst-case scenario, the Maldives will be compelled to reciprocate the new cost of a Sri Lankan visa and charge Sri Lankans traveling to the archipelago. There are also expat Sri Lankans in the Maldives.

There are only a handful of countries to which Sri Lankan passport holders can travel without any visa restrictions.

Singapore is another country which could take action against Sri Lanka if the bilateral deal is found to be violated, according a source said.

Opposition parties have said in parliament that outsourcing the visa handling to VFS Global and their partners was a bigger corruption scandal than the bond scam of 2015 and 2016, when billions of rupees were stolen through insider deals. (COLOMBO/May 28, 2024)

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