By Sanjeewa Jayaweera –
With every passing day, the two primary Presidential candidates are vying with each other to offer greater inducements to the electorate. They include free fertilizer to farmers and free meals with two sets of uniforms to schoolchildren. Also on offer is the reduction of Value-Added Tax (VAT), elimination of income tax under Pay As You Earn (PAYE), and an increase in daily wage of plantation workers.
Given the precarious position of the national economy, the offer of all the mentioned incentives by both Gotabaya Rajapaksa (GR) and Sajith Premadasa (SP) are utterly irresponsible and reprehensible. It is not known if the significant impact on the national economy in terms of reducing state revenue and increasing government expenditure has been assessed. Or else, are both candidates shooting from the hip is anybody’s guess.
I recollect being captivated by an electoral promise made by Mrs.Sirimavo Bandaranaike in 1970 as an impressionable eleven-year-old. She promised to bring rice even from the moon to fulfill her electoral promise of two measures of rice per household.
The promise to bring rice from the moon resonated well with me. Given that only a few months earlier,1969, to be precise, I, along with millions of others, had listened to the radio broadcast of Neil Armstrong setting foot on the moon. Nevertheless, before long, I realized promises made by Sri Lankan politicians are never to be taken seriously.
The Colombo based middle-class believe a significant percentage of Sri Lankan adults in rural areas are gullible and naive. They supposedly accept meaningless promises made by contestants leading up to any election.
I have not come across any research to support this theory. Nevertheless, it is a distinct possibility. Thousands of such adults turning up at public rallies of these two contestants lend credence to this theory. The two major parties they represent have ruled and ruined this country in the last 70 years.
It is possible, a particular segment of the population does accept inducements ranging from a free lunch packet to a bottle of liquor. They brave the scorching sun or pelting rain to listen and cheer these false promises. I just can’t imagine they would otherwise attend these rallies to listen to all the falsehoods uttered at meetings.
As I recollect, GR stole a march on SP recently. He announced at a public rally, “Mahinda called me this morning and told me, if elected, we should give free fertilizer to the paddy farmers.” I have read in the newspapers that if this promise is to be implemented, the incremental cost would be around Rs. 45 billion.
Not to be outdone, SP responded with a counter promise. He announced he would give free fertilizer to not only the paddy farmer but to all farmers, including those cultivating vegetables, fruits, tea, etc. if elected. Another promise made by SP was that he would give a free midday meal along with two sets of free school uniforms to children in all schools.
As far as I am aware, GR has not announced a counter offer!
GR has also announced that if elected, he would reduce the VAT rate from 15% to 8%. This promise, if implemented, will have a significant impact on state revenue. According to the Annual Report of the Ministry of Finance for 2018, the revenue collected from VAT was Rs. 462 billion. If we are to estimate a 5% increase on year on year basis, the projected VAT revenue for the year 2020 would be approximately Rs. 510 billion. By more or less halving the VAT rate, the government revenue would decrease by almost Rs. 240 billion.
To state matters in perspective, the budget deficit in 2018 was around Rs. 770 billion. In terms of tax revenue, VAT and Excise Duty contribute in near equal share. Therefore, the question to be addressed is as to how this revenue decline will be compensated? Will Corporate and Income taxes be raised substantially, or will Excise Duty be raised?. Whichever tool is utilized, it would negatively impact a large segment of the population significantly.
Obviously, GR could say, recurrent government expenditure would be reduced in equal measure. However, that seems highly unlikely given that salary increments granted to public servants from January 2020 is expected to cost an additional Rs. 120 billion, not forgetting the extra Rs. 45 billion to be incurred in giving free fertilizer to the paddy farmers!
GR announced that he would increase the daily wage of a plantation worker to Rs. 1,000. This has been countered by SP offering to increase it to Rs.1,500. The fact of the matter is that nearly all plantations are now privately owned. I wonder as to how this increase is to be enforced as most of the plantation companies are currently posting losses and they unlike the state are unable to print money!.
A few days back, Parliament approved the Vote on Account for four months from January to April 2020 without a vote being taken!. The Vote on Account presented by the Finance Minister sought approval to spend Rs. 1,470 billion for recurrent and capital expenditure and debt repayments while the projected revenue for the four months is only Rs. 745 billion. The resultant deficit of Rs. 725 billion is to be funded by debt.
The Janatha Vimukthi Permuna (JVP) requested the Speaker to record their objection to the vote on account. It is reported that Bimal Ratnayake, the JVP MP, has stated, the Government had ample time to present a Budget. The Vote on Account has brushed aside Parliament’s monetary powers. The only thing that comes out of this Vote on Account is unrestrained allocations. It basically robs people of their monies. All right-thinking people would and should fully endorse his statement.
In my mind, there is no doubt, regardless of who is elected as the President of this country, the national economy will continue to stagnate.
Many unpalatable decisions will have to be made to correct wrongs committed over the last 70 years. However, based on irresponsible electoral promises being currently made by both contenders the much needed policy changes and course correction will not be forthcoming.
Former American President Abraham Lincoln is known to have said, “You can fool all the people some of the time and some of the people all the time, but you cannot fool all the people all the time.”
I am beginning to believe this is no longer the case when applied to the Sri Lankan electorate!.