14 April, 2024

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Harsha Urges Government To Discuss Plan Ahead

Opposition MP Harsha de Silva, in response to the President’s speech on the IMF agreement, said that he was relieved that the government had finally obtained the approval of the IMF Board for the USD 3 billion facility. He commended the President for convincing his majority SLPP government on the IMF program who until recent times was totally opposed to it.

Dr. Harsha de Silva

Dr de Silva stated the only political party that tabled their own plan out of the crisis was the SJB. He said their plan, named the “Blueprint”, first tabled in August 2022 and an updated version in February 2023, contained a detailed plan on how to come out of bankruptcy and set the stage for sustained growth. He said the Blueprint dealt with the sensitive issue of taxes. He criticized the highest marginal tax rate of 36% being applied at Rs 300,000 a month. Dr de Silva pointed out that the maximum rate for those earning approximately Rs 500,000 a month could be capped around 24 to 25%, while the highest tax bracket would increase to 39-40% to achieve the expected income. 

He said that they were ready to help the government wholeheartedly to rescue the country from the crisis. De Silva stressed the need to come out of this IMF agreement victorious; as this could not be another failed attempt. He called for unity regardless of party allegiances, as the President stated, as this was only the start of a long road. The next biggest hurdle was the debt-restructuring process, and to do that, massive economic reforms were necessary.

De Silva clarified what these reforms were, stating that the government revenue needed to increase from 8.5 percent to 15 percent of GDP. He explained that over 95 percent of government revenue was tax revenue, and only 5 percent was non-tax revenue. He added that to increase revenue, the economy must expand. But currently it is contracting, with lending rates increasing to 30 percent. Many small-medium enterprises had closed as they couldn’t keep up with the rates. Additionally, export companies were planning to move shop as taxes on the export sector had gone up to 30 percent while neighboring countries were only 12 to 15 percent.

De Silva called for a plan to turn the economy around and create jobs. He noted that the IMF agreement was only a stabilization program and not a roadmap to develop the country. He added that they needed to have a consistent political ideology governing the country; otherwise, they would go nowhere. De Silva stressed the need to cut Sri Lanka’s debt stock but argued that foreign creditors were not willing to carrying the entire burden, as, of Sri Lanka’s debt to GDP ratio of 128 percent, 63.6 percent was foreign debt, while 64.6 percent was domestic.

De Silva noted that the IMF’s focus was on the government reducing the gross financing need from about 34 percent to 13 percent of GDP and that the question of domestic debt restructuring had been raised at the press briefing by the IMF yesterday. Although IMF stated that methodology was irrelevant to them, they were insinuating that domestic restructuring had to happen. De Silva urged extensive discussions on critical issues like these, as they could not hastily state whether they agree or oppose such measures. According to de Silva, there was roughly Rs 14 trillion domestic debt, out of which Rs 4 trillion was in Treasury bills, and Rs 9 trillion was in Treasury bonds. He questioned whose debt will be cut and what the roadmap for reducing this debt will be. De Silva believed that extensive discussions are necessary as most of the local debt is from the Employees Provident Fund (ETF) and local banks that consist of people’s hard-earned money.

Another critical issue that de Silva highlights is the impact of the economic crisis on low-income households. In particular, he highlights the issue of electricity tariffs, which have increased by over 1,100 percent in a short span of time for the bottom 25 percent of consumers, who use less the 30 units a month. De Silva suggested that it is not the responsibility of the Ceylon Electricity Board to provide subsidies to low-income households. He argued that if this is the case, the Board will never be able to become profitable. Instead, de Silva argued that it is the responsibility of the government to cushion low-income households by providing subsidies to those who need them, while the Electricity Board focuses on becoming profitable. De Silva emphasized the need to move away from traditional politics that advocate for providing subsidies to all or going on strike. He suggested that developed countries, or even developing ones like India with their Aadhar system, are able to determine who needs help and provide adequate assistance via budget allocations. He insisted Sri Lanka adopt a mechanism of targeted subsidies. 

De Silva concluded by expressing his general agreement with the Sri Lanka’s IMF program but urged further discussion to resolve the contentious issues.

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Latest comments

  • 6
    3

    Taxes, even with Harsha De Silva’s more reassuring suggestions, can only come about when an economy is functioning in normal Westernized-style. There is a reason for working-people to pay these taxes, viz. it provides a maintenance to the already developed, normal-functioning, and well-ordered system.

    When a country has already fallen into a terrible hole, it needs a major revolution. A French or Russian revolution will not be necessary in these modern times as the French and Russians already did all the hard work for the world. The country needs politicians and diplomats to negotiate and bring back the stashed money of the people that has been placed on international markets (mainstream and alternate), by the previous regime who are now still in parliament, and still being pandered to by the likes of Ranil and Harsha.

    • 4
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      Ramona,

      Don’t wanna come between ye and your army of admirers here ……… so keeping a safe distance even further than Native Vedda :))

      What is the rationale for a person to work 6 months of the year – half a person’s working-life – to pay taxes to the government ……… mostly to “maintain” “rulers” …….. and their “self-interests?”

      Taxes weren’t always there …….. until invented by Native’s uncles of yore ……. You are lucky, Old Codger’s crowd was more honourable and upright. Some gals have all the luck! :))

      “Though the Civil War led to the creation of the first income tax in the U.S., the federal income tax as we know it now was officially enacted in 1913.” …… https://www.investopedia.com/articles/tax/10/history-taxes.asp

      Isn’t it fascinating that the FED and income tax originated at almost the same time? ….. https://en.wikipedia.org/wiki/Federal_Reserve

      “Many of the taxes we pay today were created in the 1920s and 1930s, including the estate tax, gift tax, and Social Security taxes.”

      “Rulers” have very rarely looked after the interests of the “Ruled.” ………. That’s why people all over the world always want to burn whenever they get a chance …….. Paris now …… 9th of May before ……

      That burning is not the same as ………… Old Codger getting into an Elvis suit and singing ye Haka Haka Burning Love ……. while Sinhala_Man is trying to play cacophonous guitar ……… https://www.youtube.com/watch?v=zWDcot2YezA

      • 2
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        This might’ve got truncated,

        “Rulers” have very rarely looked after the interests of the “Ruled.” ………. That’s why people all over the world always want to burn whenever they get a chance …….. Paris now …… 9th of May before ……

        That burning is not the same as ………… Old Codger getting into an Elvis suit and singing ye Haka Haka Burning Love ……. while Sinhala_Man is trying to play cacophonous guitar ……… https://www.youtube.com/watch?v=zWDcot2YezA

      • 4
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        Donno Nimal…… Seems they made all kinds of adjustments to taxes during the Great Depression in the 20s and 30s. Anyway, even the rich lost all their wealth during that time (in Sri Lanka the rich have only gotten richer during this time). All got adjusted to the modern global system of which places like Sri Lanka play foul.

    • 3
      1

      “He suggested that developed countries, or even developing ones like India with their Aadhar system, are able to determine who needs help and provide adequate assistance via budget allocations. He insisted Sri Lanka adopt a mechanism of targeted subsidies. “
      Yes, simply spraying money at allegedly poor people simply makes them more dependent.
      In India, able-bodied dole recipients are required to do work like land clearing for private owners. The employers pay the prescribed rate directly to the government.

      • 2
        1

        In Sri Lanka, subsidies were given to all irrespective of income level Ex:- Free education and Free Health services. Let us have only targeted subsidies, even samurthi was poorly targeted

        • 3
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          Free education and free health services are provided in almost all civilized countries.
          Higher education was free in much of the western world until the 1980s.
          An undergraduate is an adult and parents’ earnings have no bearing on the undergraduate’s income status for tax purposes.
          If Samurdhi has failed to target the deserving correctly, what is the guarantee of successful targetting for health and education?
          Can we target VAT and other indirect taxes based on personal income to subsidise the poor?
          *
          Many who winge about indiscriminate free education and free health services nowadays were themselves beneficiaries of these subsidies, deservedly or otherwise.

          • 0
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            SJ,
            Free education and free health services are provided in almost all civilized countries. A most fascinating statement coming from a progressive intellectual!
            What is the synonym for civilized countries? The answer is -western neo liberal democracies.
            The vulgar rich! So they set the norm, We need not think twice we simply have to follow the lead of civilized countries!. The consequence may be economic crisis, but it is our bad luck, we have not done any wrong we just followed the civilized countries.
            Then you talk of poor targeting of samudri recipients, it is due to systemic inefficiency, not to blame anyone. Even if we attempt targeting Education and help recipients , it will also go wrong . I could not find any logic there

            • 0
              0

              “What is the synonym for civilized countries? The answer is -western neo liberal democracies.”
              That is your definition.
              I consider Cuba to be among the most civilized few. I need not add any more to explain myself.
              *
              The comment on poor targetting of Samurdi recipients etc. was mainly to point to the naïveté of the suggestion “Let us have only targeted subsidies”.

              • 0
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                SJ,
                Yes! targeted subsidies!

                • 0
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                  Not targeted subsidies, but targeted cash paymentS as per IMF suggestions!

    • 3
      2

      Ramona,
      The French, Russian, and even Mexican revolutions involved eradication of the clergy. Don’t you think that’s a good idea?

      • 6
        4

        Old codger,……well, some of the good clergy were kept in France and Mexico at least. Cuba kept its Catholic priests. For Sri Lanka, only the top Mahanayakas aligned to the rulers should get kicked out. The ordinary monk of the people of the street should be honored. Aragalia monks are the most holy.

        • 5
          1

          ” The ordinary monk of the people of the street…”
          Where can I find one?

      • 2
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        old codger ,

        Too many things happen on the other parts of the world , especially
        the world we are looking up to . In the western parts of the world
        clergy was never eradicated , they were Sweetly Freed From Political
        Interference ! In other words ‘ Church was separated from State ‘ in
        the name of ‘Freedom of Religion ‘ ! It is just like Banks in that parts
        of the world ‘ Help ‘ you with loans ! Don’t they ? Can you make our
        Banks do the same ? So , catch the point OC please ! Our Clergy got to
        be Caged , not Freed ! They are already free with clubs and rocks and
        the robes raised to their necks !

    • 4
      4

      RTF I’m sorry to say this, but this is just ignorance. It takes many years to recover stolen assets. Politicians and diplomats cannot to it by themselves. https://star.worldbank.org/ Sri Lanka is already in this recovery programme.
      .
      As regards Ranil, he is not pandering to anyone. He is using them to implement his excellent plans. It would be much easier if the UNP were in Parliament but as they are not he is doing the best he can with what he has. The Rajapakses may think they own him but he is still the all-powerful President and they have to tread carefully. He will deal with them too when he is able to.
      .
      The only flies in the ointment are the mad JVP and the foolish masses who still expect their rulers to provide something for nothing.

      • 5
        2

        Svenson,

        Imagine trying to get some of that hoarded money back with Ranil & SLPP! It will never be done. Ranil with UNP, and recovery of stolen assets will fall under the umbrella of the global capitalism venture – all monies of the earth(from the hard work of the Masses), to be mixed up and amalgamated to create the next big global venture.

        Trouble is, it will be a very hard venture indeed, to force-work people. They realized long ago. Global Capitalist Venture is looking for the next big innovation to secure the money for Humankind’s happiness (with a few Trillionaires enjoying the benefits included). And that venture is the Global Socialist Venture such that it will enhance the next great innovation of the Global Capitalistic Venture.

        • 4
          3

          Oh, all right……it’s never that polarized in these enlightened times…….in these enlightened and educated times, it is a season of blending concepts for the best possible of outcomes….the most powerful computer programs on financial systems will tell you this.

          Therefore, the best outcome to come about all of this is the formation of Semi-Communist/Socialist states around the globe to balance out the Global Financial Imbalance.

          Welcome to the JVP-NPP Rule for Motherland! Only way to get our money back, lock, stock, and barrel, and in quick-step. Global Capitalistic Venture will then leave us alone to build up from ground-up and soul-up. Their next big innovation. We need to help them along.

          • 3
            1

            ramona therese fernando

            “Therefore, the best outcome to come about all of this is the formation of Semi-Communist/Socialist states around the globe to balance out the Global Financial Imbalance.”

            Are you planning to spend rest of your life with SJ alone?
            If the formation of Semi-Communist/Socialist states happens even cool old codger also

            • 2
              2

              ramona therese fernando

              “Therefore, the best outcome to come about all of this is the formation of Semi-Communist/Socialist states around the globe to balance out the Global Financial Imbalance.”

              If the formation of Semi-Communist/Socialist states happens even ever cool old codger also will leave.
              Are you planning to spend rest of your life with SJ alone?

              • 3
                2

                Native
                “Are you planning to spend rest of your life with SJ alone?”
                Ramona is an armchair revolutionary, preaching from the safety of Pittsburgh, PA.
                I doubt she even votes for the US Communist Party…..

                • 3
                  1

                  Of course not! US is a Democratic Capitalistic state ( with some decent elements of Socialism). We need them that way to maintain global stability. They created it, and now they have to maintain it for the health of the globe. It’s countries like Sri Lanka that need to adjust according to the needs of her people, instead of 1% holding all the money and pretending to the Masses that we are almost on par with USA.

              • 2
                0

                “Are you planning to spend rest of your life with SJ alone?”
                So you have been spurned by the lady after a valiant bid to curry favour with her not long ago.
                Do not despair.
                She could be all yours if only you will see the doctor without fail.

      • 3
        0

        S
        “As regards Ranil, he is not pandering to anyone.”
        Except the IMF and its masters, I suppose.
        *
        “He will deal with them too when he is able to.”
        The question is when he will be.
        Trouble with the family risks impeachment.

        • 1
          2

          Svenson

          “As regards Ranil, he is not pandering to anyone. “

          Ranil should be pandering to China.

        • 2
          2

          SJ,
          “Trouble with the family risks impeachment.”
          I wouldn’t put it past Sajith to team up with the Pohottuwa to do just that.
          Ranil seems supremely confident with all power in his hands. His true personality is on public display, as when he told off that lady official at the Diyagama stadium. Whether this is good or bad, I don’t know.
          https://twitter.com/easwaranrutnam/status/1639673480672161794?s=20

          • 2
            0

            “I wouldn’t put it past Sajith to team up with the Pohottuwa to do just that.”
            OC, be serious:
            Sajith will (or will be made to) grasp the opportunity with both hands and feet.

      • 2
        2

        Svenson
        “It takes many years to recover stolen assets.”
        Especially when there are wildy varying estimates based on YouTube reports.

  • 1
    0

    OC, ….not to mention teams of lawyers, differing legal systems, evidence acceptable to both sides, impartial judges etc etc. Some Philadelphians seem to think this can be done overnight. Is it due to the time difference? Must ask SM.

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