Budget vote underscores SLPP majority; some opposition MPs supporting Govt.
Budget 2024, which may well turn out to be one of the most pivotal in modern Sri Lankan history, was passed by Parliament on Wednesday (13) by a majority of 41 votes after nearly a month of intense debate.
There were no surprises in the outcome after a division for the Third Reading of the Appropriation Bill (Budget) was called at about 6.40 pm as the final day’s debate on the Committee Stage came to a close. The vote yet again confirmed the comfortable majority the Sri Lanka Podujana Peramuna (SLPP) led government continues to enjoy in Parliament, with the final tally coming in at 122 votes for and 81 against. One MP abstained while 20 others were not present in the Chamber at the time of the vote.
The SLPP and United National Party voted for the Bill along with several MPs who support the government from the opposition. The Samagi Jana Balawegaya (SJB), National People’s Power (NPP), Tamil National Alliance (TNA), the Tamil National People’s Front (TNPF), the Sri Lanka Freedom Party (SLFP) and alliances of government MPs now sitting independently within the opposition voted against the Bill. Thamil Makkal Thesiya Kuttani (TMTK) Leader C V Wigneswaran was the lone MP to abstain from voting.
Several MPs in the opposition defied their parties to vote in support of the Bill. These included SJB MPs Vadivel Suresh and A H M Fowzie, as well as SLFP MP Duminda Dissanayake. Meanwhile, former Sports Minister Roshan Ranasinghe, who was recently sacked from his post by President Ranil Wickremesinghe, broke ranks with his government colleagues to vote against the Bill.
Speaking during the final day’s debate, Mr Ranasinghe said his original plan had been to abstain. “We campaigned on a platform of ending fraud and corruption, applying the law equally to everyone, and a policy which did not sell all our assets to foreigners,” he said, adding that it was the opposite of what was happening now, with the new Sports Minister revoking his (Ranasinghe’s) gazette appointing an interim committee for Sri Lanka Cricket (SLC) even after “robbery [by present SLC administration] had been exposed,” and the government handing over profit-making entities to foreigners. “I will vote against this Budget for those reasons,” he stressed.
Earlier in the day, President Wickremesinghe addressed Parliament to announce to the legislature that the International Monetary Fund (IMF) had officially endorsed the release of its second tranche of the Extended Fund Facility (EFF) arrangement for the country. Pointing to the economic stability that had been achieved, the President emphasised on the need to stay the course with regard to the government’s policies executed under the IMF programme. He warned that if the IMF bailout and debt restructuring initiatives falter, the country could face another collapse.
While it is true that the queues have ended, the stability that the President speaks of is in a “different equilibrium,” SJB MP Dr Harsha De Silva told
Parliament. He pointed out there were no long queue before the economic crisis either. The difference between then and now is that a family of four who may have needed Rs 85, 000 a month to live on then needs Rs 175, 000 a month now given that the cost of living has increased by about 94%.
Dr De Silva stressed that the SJB is glad on behalf of the people that the IMF has agreed to release the second tranche of its bailout package. What the President fails to understand however, is that the burden placed on the people in order to secure the IMF package is impossible to bear. The MP added that the President’s speech made no mention of the “economic hitmen” who precipitated the economic crisis and led the country into bankruptcy.
While the opposition and some economic research institutes said the government’s programme was not working on the ground, the IMF’s announcement approving the second tranche of its EFF for Sri Lanka had answered all these negative statements, State Minister of Finance Shehan Semasinghe told the House.
If the government did not go ahead with its economic programme, the country would be in a far worse state now than it was in 2022, and would not have been able to rely on international support, Mr Semasinghe insisted.
“No government had paid enough attention towards tax administration until the crisis. However, within the past 15 months, we have taken steps to improve tax administration and widen the tax net,” he noted, though he added that the existing number of tax files was still completely unsatisfactory.
The government is safeguarding the super rich including primary bond dealers while placing the entire burden on the working people, countered Opposition Leader Sajith Premadasa.
“There are alternative ways to raise
State revenue. The first alternative is framework should be reformed and tax administration made more efficient. We need to strengthen the tax net and we need to digitise our tax system,” said the opposition leader, outlining his proposals.
NPP Leader Anura Kumara Dissanayake took aim at statements from government ministers to forget the past and move on to support the government’s economic stabilisation efforts. “Wrongs were committed, but those who are paying for those wrongs are not the ones who committed them. The people who are currently starving, don’t have medicines to give their children, or are unable to afford their basic needs have done nothing to precipitate this crisis. If we are to rebuild this country, the people who were responsible for these wrongs should be removed from power,” he argued.
Rural farmers will be among the hardest hit by the impending 18% Value Added Tax (VAT) hike, warned National Freedom Front Leader Wimal Weerawansa. “Local manufacturers will be forced to pull out owing to the high taxes imposed on locally manufactured agricultural tools and products. Up to now, our rural economy was developed by farmers. This VAT will force the rural farmers to gradually hand over their economic power and farmlands to large private companies and migrate to cities to work in modern-day slavery.”
Taxes on locally made products will also be counter-productive, given that it will result in a decrease in consumption. This means that the government will not be able to reach its tax revenue targets anyway, Mr Weerawansa further said.
The SLPP, too, is of the same opinion as the opposition with regard to the difficulties imposed on the people by the VAT hike, SLPP MP Mahindananda Aluthgamage said. He noted, however, that the VAT will not be imposed for essential food stuff, electricity tariffs, transport, education and medicines. “We will vote with the government in support of the Budget, but we will not do so willingly. We understand what people are going through. We believe that by February-March this year, there will be a massive shift for the better.”
Mr Aluthgamage urged the government not to increase VAT, PAYE and Withholding Taxes, and to remove the VAT imposed on petrol. What the government needs to do is compel tax dodgers to pay their taxes, he said, alleging that 75% of the “big importers” don’t pay taxes.
Power and Energy Minister Kanchana Wijesekara noted that a main reason electricity tariffs are high is that no new power plants had been built in the country for the past 10 years. “If we are to reduce electricity tariffs, we need to incorporate more power plants that run on cheap energy sources into our generation plans. Those in the opposition are now saying coal is cheaper, but who was it that stopped the Sampur coal power plant from going ahead? Those who scrapped the plant did not offer any alternatives,” he stressed. He alleged elements within the Ceylon Electricity Board (CEB) were preventing the construction of new power plants so they can keep taking commissions from existing ones.
He also called for more attention towards expediting approval for investor projects. “No investor will come here if they can’t make a profit on their investment, and if they can’t recoup their investment. No investor will come if they have to wait 4-5 years to have their projects approved. We spent the past year implementing various programmes to ensure that the economy is stabilised to encourage such investment,” said the minister.
The House is due to convene for its first session of 2024 on January 9.