By Pradeep Jeganathan –

Prof. Pradeep Jeganathan

Corruption in Sri Lanka concerns the public.

In this short essay, I will attempt to speak to a fundamental cause of it, and also address, how I think it affects the corrupts’ view on taxation. Corruption is everywhere in our country, small and large. Paying a policeman to overlook a speeding violation, paying extra for a housing permit, or sexual harassment in employment situations are common. We have a corrupt society.

At the heart of large scale, corruption is the recursive relationship between legislators, and business or corporate figures. If we examine the kinds of scandals we see, with imports of sugar or garlic, land use, unpaid taxes, and so on, this is obvious. A business person is given a break, an unjust break, because a legislator, that is one of the 225, who is in power, benefits. Now, politicians, no doubt have many reasons for taking a bribe. It is money, and much can be done with cash.

Nevertheless, one of the key reasons for this recursive relationship is the expense of elections to the legislature. As I understand it, the campaign cost of a parliamentary seat is 100 million, and a presidential election is 5-3 Billion, rupees. Even losing candidates, fork out this money, which comes from allied business people. From corporations too, no doubt. Once the person is elected, it is payback time. The legislator has to provide corrupt support to his contributors, or else, of course, they won’t get paid again. Even a politician who doesn’t want to be corrupt is fixed in this system.

It may be argued that this widespread recursive corruption is a product of the district-based proportional voting system we have. Indeed, this may be a catalyst to drive up costs and scale, but legislative/business corruption pre-dates, by many decades, proportional representation, and district-wide ballots. The (rev.) Mapitiyagama Buddarakhita, had Bandaranaike shot because he refused him a contract to import rice after he had worked hard to get him elected. This was in 1959.

How do we get out of this? One answer is simple, but as far as I know, no one in parliament supports it. 

What we need are limits on contributions to legislative campaigns, and limits on spending on campaigns.

Is this fair in a democracy? Does any other country allow this? It is very fair indeed unless we want the richest, most corrupt business people to decide who gets elected. And yes, it is practiced in many countries. For example, in Belgium, Canada, Chile, France, Greece, Iceland, Ireland, Israel, Japan, South Korea, Poland, and Slovenia, both contributions and campaign spending is limited by law. In these counties, spending on elections is limited: Austria, Hungary, Italy, New Zealand, Slovakia, and the United Kingdom. In Finland and the United States, contributions are limited, but spending is not.

Now, I’ve been very brief here, and of course, amounts, and limits are a complicated matter. Let that be another discussion; here I would underline that each candidate should, produce, on a website, a week after any election period political event, the cost of the event, and contributors to it. The public, civil organizations, and importantly their opponents will check it. And upon challenge in a court of law, post-election, unless audited accounts are presented in court, that adhere to the given limits, the legislator will be unseated.

The idea here, is to build, through law a new legislative system, where an MP’s electoral triumph doesn’t depend on spending 100 million, but a much small amount of money, like 1 million, collected in Rs. 10,000 increments. An MP should be paid as much as a supreme court justice is paid, and have a leased vehicle for travel, but nothing else. 

If this is successful, or even attempted, who loses out are many legislators, but also, wealthy, corrupt business folk, who like to keep spending in campaign contributions, for their benefit. And this will be fought, of course, for this is how capital is accrued through legislative/business corruption.

A key reason for the sudden opposition to taxes on individual income, which is now between 6% and 36%, and corporate income at 30%, is of course, because these explicit taxes, hide another tax. The contribution, under the table, to legislative campaigns. These new proposed tax rates are by no means high. While data on this, worldwide, is available to any reader, let me point out, that the Sterling crashed, when the top tax rate in the UK was reduced from 45% to 40%!

Indeed, if legislative campaign contributions and spending limits are adopted, it will be easier for the wealthy, to pay taxes. But they will not like it, for there is no direct gain to be made from direct taxes, it is much more profitable to give an MP 15 million over a drink, and then get corrupt benefit as a result.

So let us discuss these proposals, and have a chance to build a better country.