May 26, 2013, 10:04 pm


By Shamindra Ferdianndo


UNP MP Sajith Premadasa yesterday said that the Committee on Public Enterprises (COPE) and the Public Accounts Committee (PAC) should intervene and pressure the government to take remedial action to revive failing state-run ventures and introduce tax reforms.


The government could no longer turn a blind eye to what was going on in the public and private sectors, MP Premadasa said in a brief interview with The Island over the weekend.


The government’s failure to take corrective measures would cause further economic turmoil, the former UNP Deputy Leader warned.


Recurring heavy losses, experienced by state-run ventures, would increase the burden on those struggling to make ends meet, the UNPer said, adding that the economy was in dire straits due to negligence on the part of those managing the financial system.


Asked whether he had any specific proposals to improve the economy, Premadasa explained that he believed that the existing tax structure, wherein indirect and direct taxes amounted to 72 per cent and 17 per cent, respectively, should be drastically changed. Treasury had lost wherewithal to provide relief to the needy as the existing tax structure didn’t generate the required income, he observed.


At the moment, indirect taxes, amounting to 72 per cent, comprised 51 per cent taxes on goods and services and 20 per cent on external trade, according to Premadasa.


The Hambantota District MP said that the issue should be addressed in the run-up to the next budget. Urging the government to substantially increase direct taxes in accordance with an overall plan to bring relief to those struggling on the economic front, Premadasa said the government should initiate a dialogue with political parties, the business community as well as trade unions to address contentious issues.


Although the government declared that the budget deficit would be 6.2 per cent of the Gross Domestic Product (GDP) in 2012, it had overshot the target by 0.2 per cent, Premadasa said. "Now, the government talks of 5.8 per cent deficit in 2013. Those managing the economy are deceiving the people. It is nothing but a joke to expect the budget deficit to be restricted to 5.8 per cent of the GDP. It is not a realistic plan."


Premadasa said as a member of the COPE he intended to propose to its chairman, senior minister D. E. W. Gunasekera, to appoint a special committee comprising experts to examine loss making ventures and suggest remedial action. The same committee could be empowered to scrutinise the tax structure, too, the MP said, adding that minister Gunasekera should spearhead the effort.


Premadasa said he was planning to take up the issue at the next COPE session during the first week of June. the government had been silent on repeated calls to implement the presidential tax commission report as well as the national audit bill, he noted, pointing out the absurdity of appointing various commissions at the taxpayers’ expense while allowing vital reports to gather dust.


Commenting on a recent meeting between minister Gunasekera, who is also the General Secretary of the Communist Party of Sri Lanka and a visiting IMF delegation, accompanied by its Colombo based representative, Koshy Mathai, Premadasa said that Gunasekera had said that the country was in a major financial crisis due to increasing losses suffered by major state-run projects like the CPC, CEB and SriLankan. According to the latest Central Bank report seven ventures, including the above mentioned three, suffer losses amounting to Rs. 185 billion.


Pointing out that the meeting had been arranged by Treasury chief Dr. P. B. Jayasundera, Premadasa said that now that minister Gunasekera had admitted the mega financial crisis he should take meaningful measures before it was too late.