20 May, 2022

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Changing Pillows To Cure Headaches Will Not Solve The Financial Crisis

By Sunil J. Wimalawansa

Prof Sunil J. Wimalawansa

Constitution, Taxes, and Loss of Trust and Mandate of the Government

Since the 2019 presidential elections, there have been three substantial blunders. First, enacting inappropriate major tax cuts; Second, the disastrous 20th amendment; Third, overnight conversion from green agriculture to organic. While the first initiated the catastrophic economic collapse, the second concentrated excessive power, and protection of politicians and other wrong doors, leading to escalated corruption by the governing politicians. The third blunder ruined agricultural commodities, especially rice and tea output.

Centralisation of power and associated motives of the 20th amendment were oblivious. Parliamentarians who voted for the 20th amendment knowingly betrayed the country and its citizens for personal gain. Their wilful action led to a lack of law and order and peace. It opened other doors for deliberate pillaging, justifying their permanent disqualification for contesting future elections like convicted criminals.

20th Amendment opened the doors for open robbery

Rushed, early election in 2022 with estimated expenses of over nine billion rupees alone will not solve anything unless it accompanies a tangible and appropriate, permanent system change. Neither the temporary resolution of power cuts, shortage of food, gas, fuel, etc., nor street protests alone would resolve the current mess nor change the corrupt political system. However, sustained peaceful public protests will pave the right path with a new constitution for comprehensive solutions.

It is pertinent that the 20th amendment is revoked before the dissolution of the current parliament. It would then restore the power to the parliament, re-establish abandoned commissions to overlook the administrations and audits and liberate the legal system from executive manipulation. The first step is the annulment of the 20th amendmement and electing an interim president, and appointment a ten-member temporary cabinet to resolve the current crisis. That should follow the dissolution of the parliament and privileges, which would save funds for the country. No parliamentarian should allow diverting attention from the essential system change by attempting to patch up the existing flawed constitution with amendments.

Tax evasion must stop

The flawed and politically motivated tax cuts introduced by the president in 2019 were a dreadful mistake that instigated the economic crisis in Sri Lanka. The interim government must rescind this error and ensure the country’s laws are equally applied to everyone, including all politicians, foreigners, and companies.

In addition to politicians whom pilfering finds through legal loopholes, a few of the highest earnings professional groups in the country do not declare their regular “cash” income for taxation purposes. This tax evasion has become a routine practice in Sri Lanka, a significant loss of government revenue that is unfair to other professionals and businesses and the country.

Examples of the above include doctors and lawyers in private practice and tuition masters who do not declare their cash incomes, and small-business holders and larger estates and companies that manipulate books for tax evasion. Estimation suggests that members of these groups declare only 10 to 40% of their income for tax purposes. Consequently, the loss of tax revenue by the first three groups alone is estimated to exceed one trillion rupees each year. Therefore, a fool-proof tax collection electronic system must be implemented promptly. This will enable them to pay their fair share of otherwise ‘undeclared’ income from private practices estimated to exceed 4.6 trillion rupees each year.

From where else can money come?

It is crucial to develop a strategy to identify and repatriate the estimated more than USD 35 billion siphoned out of the country by various politicians over the past three decades, which dramatically escalated following the 20th amendment. If it succeeds, this amount alone is sufficient to pay off all foreign debt, including the Chinese loan traps, allowing the country a fresh start, and regain financial independence, sovereignty, food, medicine, and energy sufficiency and security. However, while the repatriation of funds is feasible and worthwhile to pursue to recover stolen public funds, it is a longer-term project and, thus, should not rely upon to pay for the country’s massive debt.

Government should have worked with the IMF in 2021 when they realised the impending fiscal calamity, which many scholars highlighted. The government ignored it until today because there is no ‘fat’ (e.g., commissions) to extract from IMF loans. The right person who should have gone to the IMF today is the new finance minister from the interim cabinet. The current one has lost its legitimacy. There is no need for the current or the interim government to wait for IMF advice to implement essential austerity measures to reduce costs and increase income. Each day waiting would make the conditions worse.

The loss of trust of MPs

While some MPs are untrustworthy, others are disqualified, incompetent, uneducated or unsuitable to serve the people and the country. Recent history confirmed the incapability of making the right decisions by politicians, department administrators, current and ex-military officers incorrectly appointed as head of departments and institutes in Sri Lanka, and unqualified ambassadors to represent the country. Their wrong decisions, failed leadership, the ineffectiveness of administration, lethargy, and inabilities brought disasters and disgrace to the country.

In the interim, it is noteworthy that those ministers, MPs, and department heads who are resigning from their positions since the first week of April are doing so not because of their guilty feelings or distrust of the government but solely to protect themselves from what comes next, including jail time.

The current rotten constitution must replace

Multiple piggyback amendments in the current constitution have tainted it and facilitated centralising control and consolidating corruption instead of giving power to the people. It is necessary to overcome the chaos and regain trust by conducting an election towards the end of 2022 under an autochthonous constitution after rectifying the current fiscal crisis. Meanwhile, the current leadership needlessly brought home unstable political situations (and potential war) regarding US-China and China-India conflicts. The new constitution must ensure neutrality concerning regional and global geopolitics.

Without replacing the constitution, politicians who thrive with superstitions and greed (desire to rob the country), poor leadership, and inherent corruption in the four main political parties continue to flourish. None of them is credible or capable of governing the country for the benefit of the people. Citizens must be united against such and continue to protest peacefully, with the goal of System Change, until evils are outlawed. Changes must go parallel with a clear path to establishing financial stability, sovereignty, security, ethnic/religious harmony, alleviating suffering, overcoming corruption, re-establish law and order, and having good governance.

What is needed for the next elections?

The author suggests that patriotic intellectuals develop, incorporating a “country-first” agenda to make self-sufficient in essential food, medicine, clean water, power, and other securities, expanding the renewable energy sector. A solid nationwide referendum that goes with the next election should encompass the following three items (collectively as one item), to get approval from the constituents—the public—who genuinely hold power in a democratic country:

A) Approval of a new constitution to “replace” the current, including all amendments. The most practical option is to use/adapt the draft constitution proposed by The Vinivida Foundation, which includes crucial issues, such as abolishing the executive presidency, the limit of MPs to 60, ministers to 12, and removing all perks (including the permit system) given to MPS and all other government servants. i.e., elected or appointed “government servants” must not have privileges that are not provided to ordinary citizens. Examples of the latter are permanent revoking of all private permits, including tax-free cars given to government servants, administrators, doctors, and politicians.

B) Abolish all district and provincial councils, which waste billions of rupees, incentivise bribery and hinder the country’s development. There is no need for additional ministers (such as deputy- and state ministers, etc.) to govern a small country like Sri Lanka. Eliminate all unnecessary positions in the public sector and wastage of funds.

C) Strict rules against all types of corruption, including commissions and giving and taking bribes. Re-establishing and empowering commissions for investigations and auditing etc., without political interference. All violators to get fixed jail terms without exception.

To be continued…..

Part -1: Changing Pillows To Cure Headaches: What Led To The Current Economic Crisis In Sri Lanka?

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Latest comments

  • 0
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    Changing Pillows To Cure Headaches Will Not Solve The Financial Crisis
    ———
    Pillows (Freemasons and tares)
    My point exactly!

  • 0
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    Prof Sunil J. Wimalawansa,

    I agree almost your entire write up except a few.

    I suggest to have Chief Justice as the interim President and the interim cabinet to consist of 12 technocrats not politicians who are required to implement proper economic measures that may be unpopular in the short run, but beneficial to the country as a whole in the long run.

    The reason for this suggestion is that politicians will often play to the gallery and they focus more on the next elections than the long term interests of the country.

    Provincial Councils are not white elephants , but vital as a second tier of governance that will encourage participation of people at the periphery and encourages participatory democracy while solving long festering inter racial issues.

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    Corruption is deeply rooted in Sri Lanka. The politicians being the worst offenders, corruption is a sub-culture that needs to be dismantled by the energetic youth who are holding forth at GFG in the GGG and its regional branches. The 225 are very complicit in the extreme crisis that SL is facing today. They and the other sets of parasites feeding off the people must be flushed down the same toilet. No constitutional provision should protect these scumbag slime-balls from ever again ravaging the resplendent isle, the pearl of the Indian ocean. The constitution must serve the people, not protect grand criminals.

  • 2
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    Dear Sunil,
    Thank you for your analysis and recommendations. I would add to your eloquent write up the following.
    The new Sri Lanka should be a unified equal opportunity promoting and caring country.
    The country should promote practicing the “MPH mantra” at every sector to build up an economically thriving and enterprising country which would attract global investment and support. The MPH acronym stands for M- Merit; P-Pragmatism; H- Honesty.
    If every sector including the government practice this and appointments are made on MPH, the country will have the best and dependable people running the country and local establishments. This is exactly Singapore practices which is a testament for economic and global recognition and success.
    The recent revolution and the mass movement have shown it is vital to have unity and respect for all the citizens, disregarding the language, religion and gender division, this move with practising MPH would certainly lead to a flourishing Sri Lanka.
    Dr Krish T Radhakrishnan – UK

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