Take measures to lessen economic burden in new year

The increase in the Value Added Tax (VAT) to 18% from next year is going to hit the working class the hardest. The new tax which will push up prices of basic goods and services will heap an additional burden on the disadvantaged segments in the country. 

President Ranil Wickremesinghe who spoke in defence of the tax hike said the tax increase will apply to all sectors and there would be no exemption for any sector.

The tax effect from January next year will push up fuel prices which in turn will impact many other sectors leading to a further increase in the cost of living. While the public at large have cut back on expenses by minimising the use of electricity, water, fuel, etc. as well as the goods they purchase, it will be difficult for them to cut corners anymore.

While it’s understandable that tax increases are necessary to get the country’s economy onto a steadier footing, there must be more attention paid to the basic needs of the people so that they do not get pushed further into poverty as has been happening in the past two years.

On Tuesday, the Executive Board of the International Monetary Fund (IMF) completed its first review under the 48-month Extended Fund Facility (EFF) Arrangement for Sri Lanka which will allow for an immediate disbursement of about $ 337 million. While the IMF said that performance under the EFF-supported program has been satisfactory, it underscored the need for further strengthening the social safety net and protecting social spending remains critical to safeguarding the poor and vulnerable.

This is one area the Government has not given adequate attention. Safeguarding the poor and the vulnerable does not get the kind of attention that it should.

Children are among the worst affected as prices soar and parents are unable to provide balanced meals and other needs of their children. According to health authorities and Government data, more than 43.4% of the country’s children under the age of five years are suffering from nutrition problems. These alarming statistics are not something the Government can ignore.

In a country with an ageing population, senior citizens are another segment that is largely ignored and are also suffering with their meagre incomes which is barely enough for many to survive. Both the young and the elders are two groups which are unable to fend for themselves and need State assistance in a large number of cases.

The Government has expanded the scope of the ‘aswesuma’ program and has promised many other benefits for those who need such assistance but introducing new taxes will only make things worse for those living in poverty and others who have managed to keep their heads just above the water and get by without sinking to the bottom.

While there is some good news on the economic front as the country makes its way out of the worst economic crisis it has experienced, there is no doubt all Sri Lankans will be relieved that the worst seems to be over. However, unless the man, woman and child on the street can feel the easing of the economic burden they have been carrying for close to two years, positive economic indicators will mean little use to them.

With the dawn of a new year weeks away, the Government must do more to control the prices of basic goods and services so that the long-suffering people of this country can have a better 2024 than the year they are bidding adieu to.