Editorial

The Government’s Budget for next year is to be presented in Parliament tomorrow. The rich, the poor and the in-betweens wait in trepidation for what’s in store. Gone are the days when Budgets indicated what prices would go up, for since the 1970s, ‘Budgets by Gazette’ have become the norm. But what this Budget has to focus on is how the country plans to get out of this big economic hole its governments have dug for the people.

The ordinary people have been sorely battered these past few months by the economic crisis that has seen the country declare itself a bankrupt nation. They ask the simple question: why must they pay for the blunders and corruption of a few, especially when the corrupt have faced no consequences for their follies?

The pre-Budget buzz is that it is being drafted at the IMF headquarters in Washington. This was always a favourite line of the Left when a Centre-Right party was in office. The situation now is unique. The Government consists mainly of a party that berated the IMF, but with a President identified as pro-West and comfortable doing business with the IMF. The current situation brought about by the ruling coalition forced the country to have no alternative but to seek a lifeline from the IMF to bring it out of that hole.

The Budget is presented against the backdrop of a nation begging for money. Leave alone its inability to pay its debts, it finds it difficult to pay for the next ship bringing fuel to the country. Humanitarian agencies are sending money to provide essential medicines to the country and nutrition support to pregnant women and schoolchildren, while even schoolchildren abroad are donating their pocket money to their counterparts in Sri Lanka.

With food inflation at 85 percent last month, a second consecutive season of poor harvests and foreign exchange still in short supply, paradoxically Sri Lanka remains classified as an MIC (Middle Income Country). Yet Sri Lanka is not the only country getting hammered by the ongoing global recession. To cite a local idiom it is a case of the man who fell from the tree getting gored by the bull.

In the US, high inflation and gas prices were midterm election issues this week. In the UK, the new Prime Minister told his Cabinet on assuming office: “Economic stability and fiscal sustainability would be at the heart of the Government’s mission”. Saying tax hikes are “inevitable” to plug a GBP 50 billion hole in Britain’s Budget – also expected tomorrow in London, British Government departments have been asked to cut 10-15 percent of their expenses, and high-earners are targeted with up to GBP 20 billion anticipated through tax rises.

The Colombo Government seems to have a similar modus operandi in collecting revenue. Coming alongside the 2023 Budget is a new income tax regime to offset massive losses in Government revenue due to the policies of this Government under a different President. The inflationary rate is partly due to this. The proposed income tax scheme will see a lower taxable income threshold with steep jumps in the slabs. But it will apply only to those who have tax files. To collect the revenue anticipated through this amended regime will be a tall ask when bribery at the Inland Revenue Department is rampant – from the peon to the very top other than the Commissioner General himself and few exceptions. A bribery unit will have to be set up in the department.

And what of the political parties that are exempt from income tax? Politics is one of the biggest businesses in the country. Party hierarchies talk eloquently about endemic bribery and corruption in the country, but political parties are the biggest bribe-takers. Slush funds are maintained from milking businessmen at village and city levels whose favours have to be returned by doctoring tenders. These unaccounted-for funds go into paying for party rallies, and buses to transport their supporters, while a part goes to the pockets of organisers. Separately, monies have to be spent to buy members at crucial votes.

In many democracies, even if political parties are exempt from taxes, there are other avenues that keep a tab on things like campaign finances. At the least, they are expected to make their audited accounts public. Why not in Sri Lanka?

Home-grown climate action

 President Ranil Wickremesinghe’s visit to the UN summit on climate change (COP27) in Egypt this week attracted some flak from Opposition members in Parliament, but traction from the international media for leading the charge demanding that rich countries compensate poorer countries for ‘historic emissions’ from the industrialised West that have caused global warming and the resultant destruction to the environment in the South.

The G-77 (a coalition of 134 countries of the ‘South’ including Sri Lanka) successfully ganged up to make their claim for reparation based on “loss and damage” estimating the amount at billions of US dollars. This has been a longstanding demand and the West has acknowledged that to compensate is the “right thing to do”.

However, there’s many a slip between the pledge and its execution, as one saw with the 2004 tsunami pledges. To expect cheques to be written and doled out to countries like Sri Lanka in the near future seems unlikely. Those countries in the West are facing their own problems with high inflation, gas prices and Budget cuts.

Critics of the handout to the poor countries are asking whether the world is not a better place since the Industrial Revolution in the West that resulted in the invention and manufacture of airplanes, container ships, locomotives, energy plants, so on and so forth, that have polluted the earth’s atmosphere. They ask if the rich countries are to blame when poor countries keep cutting their forests and not prioritising conservation.

Waiting for Western reparation may sound like waiting for Godot. Putting a hand out for reparation that may take a while, if never, to arrive is one thing; putting Sri Lanka’s own plans for renewable energy, slowing down deforestation and the like to protect itself from the likely ravages of nature’s wrath and climate change is another. The latter is indeed the more practical course of action.