No political will to stamp our corruption?

February 16, 2013, 5:31 pm

Editorial

Yesterday’s front page report in The Island quoting Senior Minister Dew Gunasekera saying that there was unprecedented corruption in the state sector and that the situation has now reached alarming proportions would not have surprised any reader. The public is only too well aware of this fact, though only in general terms. Gunasekera who is the Chairman of the Committee on Public Enterprises, the parliamentary oversight body, occupies a vantage position where he can see better than most how bad the situation is. Having once worked in the Inland Revenue Department, he identified that department, which together with the Customs and Excise Departments is the biggest revenue collecting agency of the government, as being among the most corrupt. He could have said as much about the Customs. Both exporters and importers are too well aware of the need to oil palms at various levels if they are to get their papers passed. We do not know what prevails in the Excise Department but it is common knowledge that illicit liquor in freely available in most villages and street corners in urban areas. Much of the enforcement obligation necessarily lies in the hands of the police, but the Excise Department too would no doubt have a role. Corruption is undoubtedly a major factor in proliferation of illicit liquor.

Time was when the Excise Department was the monopoly producer of arrack in the country. In the early seventies this responsibility was taken over by the State Distilleries Corporation which was subsequently privatized. Today much of the Excise Department’s functions relate to regulating the privately owned liquor manufacturing industry, which together with the tobacco industry, is a major contributor of tax revenue to government coffers. It is necessary to ensure that these privately-owned industries properly discharge their tax obligations to the State and this is among the functions of the regulatory agencies. The liquor and cigarette giants periodically announce how many billions they have contributed to government revenue by way of the various taxes they pay. They are in fact the ``collectors’’ – actually collecting for the state the enormous taxes that the consumers of liquor and cigarettes pay for every bottle of arrack they buy or cigarette they smoke. The actual production cost of these harmful items is miniscule against what the consumer pays. The balance is all tax that flows to government coffers.

The local liquor industry, both hard and soft, have regularly urged that the only way in which people can be weaned from the harmful effects of illicit alcohol is to reduce taxation on the legitimate products and make them more affordable. It is reasonable to assume that most imbibers choose kasippu not out of preference but because arrack is way beyond their means. So also soft alcohols like beer; they too pay hefty excise taxes and thus becomes very expensive to the consumer. There is no doubt substantial logic in the arguments adduced by alcohol producers to make their products more affordable and wean people away from the illicit non-tax paying competition. Certainly in the case of cigarettes, the price stick is working as a deterrent and sales volumes of the Ceylon Tobacco Company, the monopoly manufacturer, have kept falling as cigarettes become more expensive. But the company’s profits keep growing and it is one of the best dividend payers quoted on the Colombo Stock Exchange! While CTC would have us believe that production efficiencies are part of the reason for enhanced profits despite reduced sales, it is more likely that the industry too benefits from price increases.

The ill effect of smoking is today very well known and requires no elaboration. Governments not only here but elsewhere, for revenue and other reasons, do not ban smoking outright but try to break people away from the habit and prevent younger people from beginning to smoke by various devices including prominently displayed health warnings on cigarette packs and price deterrents. They impose restrictions on smoking in public places but proper enforcement of such laws is difficult. We occasionally see a report of somebody fined for smoking a cigarette in a court house but such cases are few and far between. Smoking continues in public spaces despite the dangers of passive smoking with people occupying such space vulnerable.

The fact that corruption is rampant in the state sector needs no repetition. Quite apart from the small fry occasionally netted by agencies like the Bribery Commission, very few of the big fish manipulating tenders running into billions of rupees and other rackets are seldom if ever caught. The VAT refund scam at the Inland Revenue Department that grabbed headlines a few years back is now a distant memory. What has happened to those responsible is not known. The machinery available to investigate and successfully prosecute the guilty is woefully lacking. So also the political will to deal with influential wrongdoers enriching themselves at the cost of the people. Recently the government legitimized the sale of duty free vehicle import permits granted to MPs and upper level public servants. It was an open secret that vehicles imported under such concessions were commonly transferred on so-called `open’ papers. Under the new rules, even such cursory subterfuges are no longer necessary. If the vehicle is not needed for job-related purposes, why grant such permits in the first place? They are purely a means of giving privileged people a chunk of money that rightfully belongs to state revenue.

It would be useful if the oversight committees of parliament like COPE and the Public Accounts Committee find out what happens to the various recommendations they make. Are their reports acted upon? It is to be hoped that with people like Minister Dew Gunasekera going on public on the extent of public sector corruption, the concerned authorities would open their eyes to the ever-growing need for stamping down on this menace. Unfortunately, there are few signs of this happening. Corruption keeps growing exponentially with the growth of public expenditure.