Saturday Dec 21, 2024
Saturday Dec 21, 2024
Friday, 7 February 2020 00:00 - - {{hitsCtrl.values.hits}}
By Chandani Kirinde
Former Finance Minister Mangala Samaraweera yesterday told Parliament that massive tax cuts put in place by the new Government without identifying new avenues for revenue generation would lead the country towards a serious economic crisis.
 |
Former Finance Minister Mangala Samaraweera |
“Due to the tax concessions given by the Government, it was estimated there would be a shortfall in revenue between Rs. 500 billion and Rs. 600 billion annually. This is close to 25% of annual State revenue and about 3-4% of GDP. The VAT reduction alone will result in the loss of Rs. 143 billion. While relief measures for the pubic are welcome, the Government has not kept Parliament informed on how it plans to mitigate the revenue lost from tax reduction,” Samaraweera said.
Speaking during the debate in Parliament on several financial regulations, the MP said that the Government was yet to introduce necessary regulations relating to the tax cuts. “Prime Minister Mahinda Rajapaksa, who is also Finance Minister, must inform the House how the Government will deal with the sudden reduction in revenue. He must also keep the House informed on how much the country is losing from these tax cuts and the sources from which additional revenue will be drawn,” he stated.
“For 2020, the Government will need Rs. 1.1 trillion to pay pensions and salaries and another Rs. 1.7 trillion for debt servicing. 2012 will be a year when even more money will be needed for debt servicing. How will these expenses be met? Will the Government cut costs on education, health and subsidies to offset the losses? Already there are cuts in pension payments,” he asserted.
Samaraweera said that fiscal discipline put in place by the last Government was already falling apart. “When we came to power in 2015, the economy was in the Intensive Care Unit (ICU) and it made a gradual recovery and was beginning to walk when the Government changed. We could not make a full recovery in five years, but if we had another five years, not only would the economy be walking but it would be running. But now again the economy is headed back to the ICU,” Samaraweera said.
He also accused the new administration of sidelining efficient officials within the Finance Ministry who could offer the best advice and steer the country’s economy toward the right path.
“The present administration has sent most of the experienced and talented officials, including senior officials at the Ministry of Finance, to the administrative pool. This is one reason for the economic mess. Only Secretary to the Ministry S.R. Attygalle is left. I am happy he is heading the ministry,” he said.
The MP said the present Government came to power with a bag full of promises but within a very short time it was taking the country towards a massive economic crisis.
“Within 20 days of taking power in 2015, we brought in a Budget to Parliament. We had only 42 MPs and managed to get the support of all. The Government is finding excuses, saying it is a minority Government and blaming us. It is almost three months and this Government has been unable to present a Budget. This is due to its inefficiency,” he added.
Samaraweera said that as the Opposition Leader had said, the UNP would support a Budget that would benefit the public.
He revealed that he appreciated the speech made by President Gotabaya Rajapaksa on Independence Day.
“People voted for him as they wanted a strong leader. A strong leader is not someone who becomes a dictator but works within the democratic framework and takes the right decisions. The President must ensure that he doesn’t come under the influence of reactionary forces. Do the right thing. Do not be afraid of reactionary forces,” he said.
Samaraweera was also sceptical about the Viyathmaga movement which backs the President.
“We cannot run a country with old army personnel and old generals. An ordinary villager has a better sense of what people want at the grassroots. I have been watching many movies these days and recently I watched a movie about the Nuremberg trials. From that I learnt that nearly 80% of the people who were Hitler’s men were highly educated with PhDs and double PhDs, but they are the ones who committed the worst atrocities.”
