Colombo Telegraph

Double Taxation Whammy From Good Governance Government

By Chirantha Amerasinghe

Chirantha Amerasinghe

In a world that is signing economic agreements against double taxation and the very thought of it is a human rights violation; here we are again shamefully saying that the citizens of Sri Lanka are subjected to a double taxation. We have to accept that any government requires a healthy tax policy to maintain a stable economy, so one cannot say people should not be taxed. However any policy should be healthy and should not harass the people, if it does it would be the demise of any government as history recalls. Lord Buddha said that “Authorities must take taxes in the matter of which a Bee takes pollen from a flower without harming it”. Coincidentally, my great great grandfathers brother, Veerapuranappu who is a national hero, stood up against such taxes and led rebellion against the English government as Viscount Torrington the then Governor of Sri Lanka imposed excessive taxes and burdened the people.

From the 2nd of May 2016 the taxes on telecommunication services were double taxed by VAT and NBT. As a result the tax on telephone charges which was at 27.55% rose to 49.73% which is an increase of 80%. Also the tax on internet charges which was at 12.24% rose to 31.77% thus an increase of 159%. Currently the effective rate of VAT on the above taxes is 19.53% which is 4.53% higher than what is said in parliament due to a effective rate policy. This cannot be a policy of “Good Governance” either.

The background story lies behind the reintroduction of the VAT and NBT to the Telecommunications Sector through the budget which took effect from 2nd of May. The current government accused the former government of removing VAT and NBT from the Telecommunications Sector to make a political gain in a Parliament full of old and out dated people who cannot even listen or remember these actions and are not even bothered to do so. In reality the former government did not remove VAT and NBT from Telecommunication Services but rather combined the two into the Telecommunications Levy which today stands at 26.04%.

On 22nd November of 2010 a budget was passed in parliament by the former President now MP Mahinda Rajapaksa who was quoted saying “The Telecommunications industry is the backbone of modern economies. The tax applicable to this sector is complex. Therefore, I propose to combine all such taxes and impose a Telecommunications Levy of 20 percent.”. Thereafter the Central Bank Annual Report of 2011 quoted “A Composite Telecommunications Levy of 20 per cent was introduced replacing the VAT, NBT and Cellular Mobile Subscriber’s Levy on telecommunication services.” (Page 191). Therefore it is clear that the current government’s statement with regard to the removal of VAT, NBT is false as it is already included in the Telecommunications Levy, so the reintroduction of the same is clearly illegal as it is a double taxation and is also in breach of the new governments Good Governance promise to the people.

A family I know has three boys (all of them are teenagers). After the tax hike each teenager needs Rs. 100/- for their phone every two days. Now you might think that the boys spend too much of time on the phone, No! Rs. 100 only allows a person to talk for 25 minutes on the phone with the new tax whereas before this they could talk for 36 minutes. Communication in a troubled country is the only solace people have to say their troubles and pains and to share their grievances. This taxation has negatively affected the social connections in the society as well as the mental happiness of the Sri Lankan citizens especially the Youth who due to the challenging and corrupt society are trapped to their homes for their own safety and are forced to express their emotions over telephone calls, now they cannot even do that “mal kadanna” and sometimes people are forced to balance their relationships over the telephone because of heavy work. We no longer live in a country that a small girl can walk to school and back without the protection of their parents. Parents cannot send out their teenage boys without the risk of them getting involved in drugs, smoking and alcohol.

In foreign countries local calls or calls within networks are mostly offered free of charge or are free for a substantial amount of talk time for a monthly rental. In my conversations with the Telecommunications Regulatory Commission of Sri Lanka (TRCSL) it is confirmed that costs of call charges within networks are very very low. However the sale of the Dialog Blaster package which offered 1000 minutes of D2D talk time was stopped by the TRCSL in 2009 mainly because free minutes for Rs. 350 meant less tax income for the government, the TRCSL behaves like the Business Regulatory Commission setting up minimum rates for calls and destroying business competition that consumers would benefit from. Today this is the same reason prices of Petrol and Diesel have not come down. It is the same reason law enforcement officers are required to bring up X number of fines. How does a government predict or demand X numbers of fines? These are all policies of the old government! One must ask are these policies of Good Governance?

The Sri Lankan Media has been awfully silent with regard to this matter of Double Taxation on Telephone charges mainly because of the weather situation and the natural disaster. However weather is temporary and taxes are not, as such the media should bring up the required uproar against this injustice. Many international media’s which were taking the side of the people during the former government so much that they had to be blocked are now taking the side of the government even when they are seeing this injustice and breach of “Good Governance”. In one such interview in the BBC Sinhala section, the Minister in charge of Telecommunications tries to justify the taxes because telephone charges in Sri Lanka are the 13th lowest in the world. Comparatively in that list, considering the size of the country, and costs compared to the others in that list it is clear that Sri Lankan phone call prices are overpriced. A MP in the now government was quoted saying “Phone calls can be given for 40 cents a minute” when he was in the opposition. Nowadays he goes on the local media and tries to justify the taxes.

Effectively in the historical perspective the now President and Finance Minister are related to history in many ways. Just like the English taking over the country from the Dutch, the now President has taken over the country defeating the former President. The President now respectfully depicts the Queen of England. The Finance Minister is now effectively the Viscount Torrington the governor who has burdened the people with excessive taxes. And now today the people have risen against this move. As a member of the National Movement for Consumer Right Protection, I earnestly request the public to take part in the protest that will be held tomorrow Sunday 29th of May 2016 at 10.00AM in front of the Fort Railway station where a petition will be signed to take this matter to the courts. This is a struggle for our future and democracy with a government that has delivered burdens more than the solace promised to people and has forced people go to courts over government policies, those who do are branded as people who are trying to bring forth the thieves of the former government. All these matters even though hilarious now are clear indications of a stubborn and dictatorship rule in the future.

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