Sunday Island Editorial

Undoing the budget

Sunday 29th November 2015

Nobody would have been surprised at yesterday’s news that the Sri Lanka Administrative Service (SLAS) Association has protested about the car permits for qualified public servants being withdrawn. Nobody likes losing privileges they enjoy and some noises about possible strike action (they’ve called it "severe trade union action") against the budget announcement have already been made. MPs who will also lose the privilege have so far said nothing. We don’t know if those elected for the first time last August have already cashed that particular cheque and got their duty free vehicles, or at least set the ball rolling (or wheels turning), to get it. If that was so, the early birds are certainly not going to lose the worm. After all they are MPs aren’t they and their privileges are customarily enhanced and not diminished as the public is too well aware. It won’t be long before non-SLAS categories like doctors, engineers, university dons etc. mount the bandwagon. There’s more than a sporting chance that the government would relent.

It looks as though Minister Ravi Karunanayake’s Budget 2016 is already being undone. Yesterday’s The Island reported that Prime Minister Ranil Wickremesinghe had said that Parliament will have to decide whether a special tax be imposed to pay for some ongoing projects that had been launched without allocating sufficient funds to pay for them. There was no mention of any of that in the budget speech and the people are not likely to take kindly to new burdens being heaped on their backs. The previous regime certainly splurged wildly on least essentials. Remember what was spent trying to get the Commonwealth Games here? Thank goodness it went to Australia. We are now told that the construction of four new buildings at Temple Trees had commenced under the old order with no funds allocated and the contractors are yet to be paid. Work on one five- storey building has been stopped while another under construction would be done at Bentota instead, the premier said. Hopefully the expenditure already incurred at Kollupitiya is minimal. Those who have been to the prime minister’s official residence in recent years, appropriated by President Mahinda Rajapaksa for himself during his regime, have seen the kind of extravagances that have been lavished there under pretexts such as the Commonwealth Head of Governments meeting hosted here. Facilities provided were brazenly used for political purposes to perpetuate the Rajapaksa raj.

The budget proposals of removing the expensive fertilizer subsidy and paying paddy farmers a cash grant of Rs. 25,000 per hectare of cultivation in lieu has triggered angry protests. It is unlikely that this budget proposal, at least in its present form, will see the light of day. There is no doubt that the previous subsidy arrangement was not leak-proof. Equally, what guarantee is there that farmers will use a cash subsidy to buy fertilizer for their fields rather than spend it on everyday consumption? Meeting the cost of living is an eternal struggle for the poor – and peasant farmers certainly belong to that category – so the temptation to spend now and worry about a reduced harvest from an unfertilized field later will be immense. It has already been announced that the vehicle emission tax will not be imposed on three-wheelers and motor bikes; and rightly so. Now they are talking of a ‘congestion’ charge. Chances are that the number of registered vehicles on the books was multiplied by the 5,000-rupee tax charge and the result included in the budget revenue figures. All this will need adjustment of the numbers.

We commended in this space the withdrawal of the special car permit scheme in our first post-budget comment. It was doubly sensible in that the facility was taken away from MPs too. Most readers, certainly of the older generation, would have heard Sir. John Kotelawela’s celebrated remark, henda athey thiyanakang beda ganilla – serve yourself as long as the ladle is in your hand. That certainly is what has long been happening where the political and to some extent the administrative class in this country has been concerned with regard to many matters including car permits. The prohibitive duties long imposed on the import of vehicles certainly made a duty free permit to import a car a valuable privilege. We wouldn’t grudge it to many of those who have got it if they use their private vehicles, imported duty free, for their official work, perhaps charging a reasonable mileage rate. But no, they keep their private cars garaged at home for the wife to go marketing and drop the children off at school and all official and many private errands are run in the official vehicle. The perk includes an official driver courtesy the taxpayer. Then these permits are renewed every five years so it’s a recurring privilege.

Time was when the government gave certain categories of public servants car loans to buy private vehicles. They were required to use such vehicles for official work for which a mileage rate was paid. Old timers used to say that the mileage claim sufficed to pay the loan installments. Those were spacious days when a public service salary went a long way and enabled reasonably comfortable living. An MP was paid an allowance of Rs. 750 a month and there were no pensions after five years service and other lavish perks of the present. The beneficiaries of the car permits are allowed to sell them today. They used to in the past too resorting to what was called an ‘open papers’ ruse where the seller provided a signed transfer document which the buyer did not register at the motor traffic department until the period of prohibition of sale was over. MPs are given up to a USD 50,000 loan facility or Rs. 5.8 million from any bank to open a letter of credit for a car import. The engine capacity of vehicles permitted to be imported duty free was also raised enabling expensive high-end vehicles to come in. All these made the car permits very valuable indeed. No wonder then that every possible effort is being made to keep their issue intact.

If the government is going to backtrack from its announced intentions, let it also restore the abolished income taxpayer privilege of a car permit. Under this, person who had paid over half a million rupees income tax per year over a five-year period became entitled to a permit enabling a partial duty waiver on the import of a car. These permits too were sold and car importers knew exactly how to do this business in the same way that private hospitals know how to handle getting assistance from the President’s Fund for patients needing by-pass surgery!