By Jehan Perera –

Jehan Perera

At a time when the two elected branches of government have little or no legitimacy the unelected branch is gaining in legitimacy. The government has lost much of its legitimacy on account of being constituted in the main by those who were forced to step down in the face of the Aragalaya mass protests of a year and half ago. The Supreme Court’s verdicts in recent cases have been little short of remarkable. The verdicts in the Online Safety bill case involving control over the social media, De-radicalisation from holding violent extremist religious ideology-Regulation No. 1 of 2021, which would have permitted the government to send suspects off for compulsory rehabilitation without going through the courts, and the arrest of Mohamed Razik Mohamed Ramzy for hate speech being declared illegal have put the court solidly on the side of the democratic rights of the people.

The Supreme Court judgement in the case involving the apportioning of responsibility for wrecking the economy two years ago is also a path breaking one. The court held that a group including former president Gotabaya Rajapaksa and former prime minister Mahinda Rajapaksa violated people’s fundamental rights by mismanaging the economy between 2019 and 2022. The court that they had violated public trust and the constitution in their administration of the economy, leading to the economic crisis in the country. However, the court has not gone as far as to mete out exemplary punishment to those deemed to be guilty. This has led to demands from those in the opposition that they should be deprived of their civic rights and subjected to financial penalties.

Unfortunately, the efforts at progressive thinking demonstrated by the Supreme Court, is not being demonstrated by the other two branches of government. There is no system change at all as demanded by the Aragalaya protest movement and is the aspiration of the people who joined it physically and gave it their moral support from all corners of the country. Instead of change there is more of the same, except that the government has successfully delinked more of the upper economic classes and business elites from the protest movement. It has successfully catered to the self-interest of those who are rich, powerful and influential in relation to the population at large. It is like the French queen Marie Antoinette saying let them eat cake before the revolution. The recent budget which has won the support of the chambers of commerce exemplifies the policy of serving the interests of those who have to whom more is being given.

INEQUITABLE TAXATION

The increase in the Value Added Tax (VAT) from 15 to 18 percent and its application to nearly all commodities purchased by the rich and poor alike would impact more severely on those at the bottom end of the economic hierarchy than those at the top. In 2022, the common suffering experienced by all sections of the people of enduring fuel queues and power-cuts led a unique sense of unity. At Galle Face and in other parts of the country, individuals from various economic backgrounds—whether rich, middle class, or poor—stood side by side in a shared experience of deprivation. But today the economic challenges are no longer a shared burden. Presently, the hardships predominantly affect those in the bottom half of the income spectrum. The feeling of collective solidarity has dissipated. More than half of the population is grappling with hardship without a sense of hope, while those at the top are able to manage and some more than others.

The basic problem with the government’s approach to coming out of the economic mire is that its policy reforms are not being done with the vision of the common good predominating. This is nowhere to be better seen than in the area of tax policy which focuses on increasing government revenue. According to presidential advisor and former International Monetary Fund Director Dr Sharmini Coorey, the first indicator of Sri Lanka’s shortcomings in economic reform is its excessive reliance on indirect taxes over direct taxes, as well as its preference for taxing labour over capital. She said that “Both aspects violate the principle of fairness as indirect taxes shift the tax burden towards the poor who spend more of their income on goods and services, while capital income accrues mainly to the rich,” giving the 73rd Annual oration of the Central Bank of Sri Lanka. https://www.dailymirror.lk/breaking-news/Sri-Lanka-continues-to-flout-key-principles-of-tax-policy-economist/108-270650

The violation of tax principles is also seen in the continuing bestowing of substantial tax holidays. With the tax reform of October 2022, most companies are now subject to a standard 30 percent corporate tax rate. However, favoured projects continue to receive wide-ranging tax exemptions under the Strategic Development Projects Act. Based on vague criteria, projects can negotiate exemptions from eight different tax laws, including corporate, personal, VAT, excise, and customs for as long as 25 years. Given that the tax exemptions mainly benefit the shareholders of corporations who are not merely rich, but are super rich, Sri Lanka typically extends welfare for the rich and the super-rich that far outweighs the small payments the government transfers to the poor through programmes like Aswesuma.

STATE RESPONSIBILITY

Recent pronouncements by government leaders indicate that the government is planning to give up on the longstanding policy articulated by the country’s founding fathers of universal free education and health services. The provision of these basic needs to the people regardless of their place in the economic hierarchy was one of the blessings by the newly independent country’s leaders to its citizens (with the cruel exception of the Tamils living in the plantations, the legacy of which continues to haunt). Both of these essential services, whose need is felt when a loved one fall seriously ill, and which provides the gateway to social mobility for those born to less privileged backgrounds, are now under threat of being irretrievably rundown by corruption and underfunding. It is acceptable to provide for private hospitals and universities for those who can afford them, but it is unacceptable to rundown the state hospitals and universities for those who cannot.

In a recent speech at a private international school, President Ranil Wickremesinghe said that the government was planning to provide students with a cash grant or voucher scheme to support them to go to fee-levying private educational institutions. Most private education institutions are not run for charitable purposes or for the purpose of the common good, but for the purposes of private profit. It is unlikely that a student from an underprivileged or economically poor family background could utilize a government grant or voucher and pay the balance required to attend a fee-levying private educational institution. The government must not abdicate its responsibility to provide a high quality education from state-run educational institutions, as indeed the president himself benefited from such facilities throughout his schooling, all for free in Sri Lanka itself. The quality of that education was so good that it has equipped him, and others, to be equals in the competitive international world, whether of politics, academia or economics. As Minister of Education four decades ago he did much to uplift the state education system.

The state sector is necessary to provide the regulations, the infrastructures and the commitment to social welfare to ensure the common good. There are many countries that provide models of free education and healthcare that are provided by the state. Sri Lanka has been one of them, though this is now being called into question on efficiency and affordability grounds. Giving more and more power and responsibility to the private sector is to abdicate the state’s responsibility for ensuring the fullest development of the country and its people. The Supreme Court verdicts in all of the recent cases involving the government highlight the need for change. The leaders of government today, and those to come, need to take their responsibility of working for the common good with sincerity