Monday, June 30, 2014

The Rising Inequality in Sri Lanka – A case of comparison with the US

It is worth looking at the reasons for inequality in Sri Lanka, and comparing it with recent US history as it relates to the distribution of wealth and in that the article in the New York Times by the well respected economist Joseph Stiglitz is worth a read.

In the US he states how the system favored the Banks and Institutions over the people, and this resulted in wealthy being assisted over the poorer sections, which had an adverse effect on the recovery, and if for example some of the breaks went to home owners, over the lending institutions, then the recession would NOT have been as severe, and so many people would not have been left with negative equity.

The same issues do not arise in Sri Lanka, but there are just as important if not more, issues at the heart of why inequality is growing exponentially, and there appears to be NO effort by the Govt. of putting a break on this process.

Even compared to the US, that is now insisting that US citizens, where ever they maybe are tracked and their income and bank accounts monitored so that all sources of income are ascertained and if taxes are due they are tracked and collected. So the US has high income tax rates, capital gains taxes as high as income taxes, and there is duty on the estate one leaves behind on death as well as lifetime gifts that are made. There are very strict controls in the system to ensure the tax net falls all around, and the taxes are collected. SO there is inequality rising even despite the wealthy being taxed at every corner, and I have NOT mentioned sales taxes on almost everything that is purchased.

In Sri Lanka except for taxes on essential food stuffs that hit the poor, a regressive tax, there is NO tax on the rich. Simply put Sri Lanka is the biggest tax haven on earth where wealth is not only protected, without taxation this will grow at rates in multiples to that of the US. Due to their being NO tax files on most of the wealthy Sri Lankans the overall tax net that people get caught in is negligible leading to extreme situations where the wealthy can double their assets in a year with NO tax paid during this amassing of wealth.         


Anonymous said...

It is clear from just this to any intelligent person, that Sri Lanka is the ultimate Capitalist State, where as in comparison the US is positively socialist, and it is time we corner all these pundits who keep saying the reverse is true, and show them that they are living in some unreal figment of their imagination.

Anonymous said...

Sri Lanka is the Wild West gone totally mad, where there is NO rule of Law whatsoever.

It is simply the rule of thugs of the ruling regime and their accessory who are the Police and other Security Forces, who have clamped down on any resistance.

Anonymous said...

the wealthy in sri lanka also don't build wealth as much as just trade in papers, buying the paper at a lower price than which they sell it. value addition is key to economic development but the rich don't want to invest their funds into productive enterprise.

the overseas tax havens like singapore need to be brought to book, and sri lankan assets (ie funds sent abroad by rich sri lankans and held in closely held corporations or trust) must be identified and taxed to incentivize the return of these funds and use for productive purposes, unless they are illicit funds in which case they should be seized by the state and the owners of those funds jailed.

a big problem we have in sri lanka lies with the political opposition as it is incompetent in winning the hearts of the sri lankan people, and so the government can go along unaccountable to the public. in addition, all parties are manipulated by greedy private interests which run wild and profiteer when their party assumes office. an independent anti-corruption commission that has judicial and enforcement powers must be established to deal with this problem.

There is so much work to do. What are our politicians actually working on then?????????