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The Committee on Public Enterprises (COPE) has probed a record 235 State-Owned Entities last year as part of improving accountability and performance, with its Chairman revealing 95% of the public sector losses coming from only four institutions – CPC, CEB, SriLankan Airlines and Mihin Air.
“There is perception among the public that all State-Owned Enterprises are loss-making or collapsing.
There are 235 State entities. Of the 41 commercial enterprises, only 11 are loss-making and of this only four are responsible for the 95% of the entire public sector losses. The latter however is for some special reasons,” Human Resources Minister and COPE Chairman D.E.W. Gunasekara said on Friday at the launch of the 2012 Annual Report of the Finance and Planning Ministry.
Whilst noting that the State sector was lacking modern accounting and auditing methods he said COPE action has considerably improved the performance of state owned enterprises.
According to him in the past only a few enterprises were probed by the COPE with numbers ranging from a low of 25 and a high of 75. “However in 2011, we probed 219 enterprises and last year we completed discussions on all 235 enterprises,” Gunasekara said, adding, “our work has had a great impact.”
COPE’s own Annual Report is due to be released soon and will have further details on its activities as well as the state of the State-Owned Enterprises.
Minister Gunasekara in his speech, at the ceremony officiated by President Mahinda Rajapaksa, also came down hard on the erosion in Government revenue and the widening disparity in people’s income. “My question is, does the rapid rise in GDP numbers reflect in the income levels of the ordinary people?” he queried.
“If GDP is growing, then Government revenue should rise correspondingly. It is via channelling higher Government revenue to basic needs and social service that poorer people and pensioners can be served apart from ensuring higher public investment. We have widening income disparity in the country even though as per global standards a 1% rise in GDP will translate in the reduction of poverty by 4%,” he opined.
Gunasekara said that despite doubling of per capita income, tax revenue has declined and non-tax revenues have remained insignificant. He also pointed out that the Treasury has paid Rs. 2 billion as PAYE of employees in 28 State-Owned Enterprises. “This is a policy issue and cannot be condoned as the Treasury shouldn’t be paying on behalf of employees of these enterprises,” the COPE Chief emphasised.
Noting that the income tax regime and revenue in Sri Lanka are the lowest in the world, the Minister said there was greater responsibility on the three revenue collecting agencies – the Inland Revenue Department, Sri Lanka Customs and Excise Department.
“I make a humble appeal to the President that the Government must set higher targets for Government revenue and tax income. The Government must pursue this target aggressively,” Minister Gunasekara said.
During his address, President Rajapaksa did respond to some of the comments of COPE Chief. The President warned of the dangers of excessive taxation destroying the economy and to drive home the point referred to how the bee draws honey without destroying the flower. He also said low tax revenue could be due to evasion or various deterrents whilst officers shouldn’t unnecessarily harass existing taxpayers either.
However, the President urged the private sector and people not to hoard their earnings abroad but bring it back to the country making use of the concessions introduced by successive budgets.
