DEW sounds alarm bells on woeful tax collection, waste crippling the country

April 19, 2013, 12:00 pm 

By Shamindra Ferdinando

Communist Party of Sri Lanka (CPSL) General Secretary and Senior Minister D. E. W. Gunasekera yesterday called on the government to wake up to the grave crisis facing the country due its failure to increase the tax revenue as a percentage of the Gross Domestic Product (GDP).

According to the latest Central Bank statistics, government revenue had come down to 11 to 12 percent of the GDP, the minister said, noting that it was the worst post-Independence scenario. He said that in spite of the conclusion of the conflict in May 2009, the government hadn’t been able to streamline revenue collection operations.

"We are in a major crisis and the situation could deteriorate further unless corrective measures are taken immediately. Unfortunately, those responsible for taking remedial measures are acting as if the economy were on the right path," Minister Gunasekera said.

The veteran politician was responding to a query by The Island whether the SLFP-led UPFA could continue to engage in extravagance after having declared that no government could subsidise utility services forever.

CPSL is a constituent of the UPFA. Minister Gunasekera is the Chairman of the Committee on Public Enterprises (COPE), one of the two standing watchdog committees responsible for inquiring into the conduct of those running public enterprises.

Minister Gunasekera said that the government would have to set an example by doing away with unnecessary projects as well as curbing perks and privileges offered to various people, including politicians at the taxpayers’ expense. Certain controls on imports, too, would be a necessity in accordance with an overall plan to curtail expenditure, he said.

"Let me give you a simple example. While addressing a public gathering in Kurunegala, I requested those engaged in farming to raise their hands if they didn’t own a hand phone. None of them did. Those proudly making pronouncements regarding Sri Lankans having 20 million hand phones have failed to realise the absurdity of the situation. The fact that the number of mobile phones in the country is equal to the population means the vast majority of those surviving on one or two meals a day, too, own a phone."

The CPSL chief said that the government tax revenue had been as high as 24 as a percentage of the GDP when the then Prime Minister Sirimavo Bandaranaike handed over the administration to UNP leader JR Jayewardene. Alleging that the UNP, in spite of making a big noise about irregularities in the public sector, had never managed to improve the situation, minister Gunasekera said that in the 2006/2007 the direct tax revenue had accounted for 14 to 15 percent of the GDP.

The minister said that the government couldn’t be complacent, though the Opposition was in total disarray. Asked whether he, as the head of COPE, could suggest some remedial measures, he said that tough austerity measures would be needed to arrest the situation. The failure to take some hard decisions now could cause a catastrophic situation, he said. The government would have to streamline the revenue collection process, tackle waste, corruption and irregularities in the public sector, while ensuring the private sector wouldn’t make profits at the expense of the public sector, the minister said.

The people, particularly those facing economic hardships, too, would have to be careful, especially in the wake of the latest hike in electricity tariff, which would cause increase in many other services as well as products, he said.

The minister lamented that a report submitted by presidential taxation commission, headed by Prof. W. D. Lakshman, was gathering dust, while those responsible for directing the economy turned a blind eye to the ground situation. The government would now have to review all its projects and take sensible measures to control public spending regardless of their short-term impact, the minister said. The reluctance on the part of the government to act now would be advantageous to those waiting to make political capital out of economic woes of the public, he said. .