Dec 30, Colombo: Sri Lanka at the moment has several burning issues. On one side the military is fighting a costly war to eliminate the brutal LTTE rebel organization and bring the land under control. On the other hand the citizens of the country are feeling the burden of increased prices of bare necessities. Amid all of this there is a relentless campaign by political parties, trade unions and other interest groups to get political mileage out of each and every issue.
Despite the ongoing war and rising global prices of commodities, Sri Lanka has fared well with a healthy rate of economic growth. Besides controlling the wastage of public funds, there is little the government can do to keep prices of essential items down as global prices of food items rise. Is there something the government can do about the energy costs?
Global fuel prices fell sharply as the financial crisis took the world by storm but the government couldn't pass the benefits to the people as it was locked into a deal that was signed when fuel prices were high. When the Supreme Court intervened and halted the hedging deal the government reduced fuel prices to provide some relief.
But for some sections of the country that was not enough. They sought the high court's assistance again to reduce the price of petrol, which the courts decided should be sold at 100 rupees per liter, 22 rupees less than the current price. The extra burden on people came from the taxes imposed on the fuel; they argued and the Supreme Court acting on the argument ordered a reduction in taxes. This is where the problem began.
Revenues to run government functions come from taxes imposed on services and materials it provides to its citizens. The government has to impose import duties and value added taxes periodically on certain items so that it can provide concessions on other essential items like the milk powder the poor needs or on services to the poor. Considering these, reducing the taxes imposed on petrol does not necessarily benefit the poor although one may argue that there are livelihoods like those of three wheel drivers that depend on the fuel prices. If the government loses revenue from one source, it either needs to get that revenue from another source or cut the programs that it offers to the public to compensate for the losses.
In this context the government's refusal to obey the Supreme Court order may be justifiable. However, the interested parties are not willing to stop there. They want to haul the Treasury Secretary and the entire civil administration to jail for contempt of court and paralyze the government.
There are several questions the public needs to ask from these fame-seeking politicians gung ho on destabilizing the government when it is engaged in a decisive military battle to rescue the nation from the terror grip of the LTTE. Who is really going to benefit from the revenues lost to the government? Which services should the government reduce? What items should lose the subsidies or receive more levies? What should the country give up? Do those politicos who say they are concerned about the poor really have any consideration for the poor, or do they just want power over the poor?
If one really analyzes the situation, it appears that there is a bigger conspiracy here. By attacking the civil administration and the country's economy by reducing the government's revenues, the government is forced to cut back on the military operations in the North while the military is making gains and the LTTE is at a crucial stage of losing their territory and the grip on the people they have imprisoned in Wanni.
The dysfunctional situation in the South then certainly will give an opportunity for the Tigers to regroup and rearm with assistance from sympathetic elements in the South.
All attempts made by the Tigers to halt the military operations through an Indian intervention failed when terrorists attacked Mumbai on the same day the LTTE invited India to intervene.
Recently the LTTE political chief told media that they will cripple the country and the economy and plunge the country into trouble very soon. It appears that plan was launched and they have found an ally in the South to indirectly assist them.
All countries in the world impose taxes on commodities as a means of revenue. In no other country in the world does the opposition take the democratically elected government to the Supreme Court over levies imposed on common commodities like fuel. It is an unprecedented move by the judiciary to intervene in the budgetary plans of the government.
If the government follows up on the Supreme Court decision and if the opposition politicians have their way with the fuel crisis, it will set a disastrous precedent for similar actions on every minute issue. The only party gaining from such a move is the opposition and especially the shadow finance minister of the opposition, not the ordinary citizen. When the civil administration of the government is interrupted, it will create mayhem for everyone from the top all the way to the bottom.
The gravity of the problem is still not clear to the public. Even the top officials and the government politicians do not seem to understand the real consequences of such a situation. Therefore it is the responsibility of all citizens and officials who are living in this country to avert such a situation. Failure to do so can have dire consequences on everyone's lives.
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