Wednesday, November 23, 2016

Consistent policy is NOT something you play games with for short-term political mileage.

That is why we have got into a mess with the lack of consistency!

Let us take the example of Cigarettes. The Ceylon Tobacco Company the highest valued company on the Colombo Stock Exchange until the Govt. increased taxation on cigarettes, and has now gone down to second position behind John Keells, with a market cap of Rs163B, pays at the rate of Rs100Billion to the Govt in taxation each year. That was before the recent tax increases, namely the increase in Excise Duty, and VAT on the total Price including Excise Duty, or in other words Tax on Tax!

If the policy was to raise revenue by increasing taxes, the Finance Minister will have to immediately change his revenue forecasts even as the budget debate continues, as we have seen a DRASTIC fall in the taxation collected, much as I predicted in this blog a few months ago. Now it has halved! How is he gong to pay for his miscalculation?

Actually any moron could have forecast that trend, however the know nothing know it alls who pretend to run this Country (into the ground more like) are happily sailing in a sea with NO wind, (going nowhere and not realizing it) as they are busy debating figures that are all wrong from the beginning!

To add fuel to this fire, Minister Rajitha Senaratna announces another acinine proposal in the middle of the Budget debate, to prevent cigarettes being sold singly by shop keepers, and that they can only sell them in the sealed packets of 10 or 20 that they come in! Have they completely gone nuts? As long as I can remember in Sri Lanka, single cigarettes have been sold so people can simply smoke one or two after a meal, and not have their packets go stale, for those who cannot do without a cigarette while having a drink or after a meal. It was actually a means to reduce consumption NOT increase consumption. It is clear these ministers who live in IVORY towers have NO clue how the poor and those attempting to give up the habit actually try to reduce their smoking.

This attempt is clearly a stab in the back for the poor, and those who smoke minimally, while pretending to be a progressive move in the fight against smoking. This with the full connivance of the GMOA, another body, who revel in the people’s sickness and NOT in wellness, as the all powerful, money grabbing self serving Trade Union.

As if to emphasize the point that Dr Senaratne always makes his entry at the most inappropriate or ill timed moment, this has NOTHING to do with the revenue raising or losing capability, and is a bogus attempt at deflecting the crisis facing the Country, to a wholly unworthy trick to fool the people as another progressive step.

In my opinion, this is going to encourage some people to buy a packet, which they cannot afford, and somehow find a means to stretch it for as long as they can. The flip side of this exercise is the devastating affect it will have on households, when some of the poor people’s spending money is shifted to cigarettes from food, thereby affecting the poor woman at home trying to feed her children, in light of the increasing allocation of the household budget to tobacco! In all these exercises to boost Govt. revenue those who suffer are always the innocent, and the total lack of compassion from the Parliamentarians, nor their lack of concern as to how some people actually live, has resulted in huge policy mistakes.

I wish to add one more dynamic to this Tax issue as well the Packet Sale issue, as now the Beedi sales are skyrocketing and the tax collected thereon is minimal. Further the raw material for the beedi is imported, while the Tobacco is grown in Sri Lanka, further affecting the livelihood of the Tobacco farmer with the lower demand owing to less cigarettes being smoked!

A worse phenomenon is the increase in Betal Chewing as reflected in the huge increase in price of Betal leaf, and Arecanut/Puwak which now is even being imported to satisfy the demand. We have an export market for Betal leaf to Pakistan, which is now not as important due to the sudden resurgent demand, making it more lucrative to sell locally. This tendency to chew betal as an alternative to smoking, and with it the attendant, throat and mouth cancer threat has NOT been addressed by the famous GMOA!.

Actually if health costs are paramount, then a tax on sugar to reduce consumption is bound to lessen the prevalence of Diabetes that is spreading, and so the Policy schizophrenia is even more apparent with this non-congruence of Govt. policy referred to as the main topic of this essay. Remember the reduction is the import duty on Sugar?

Actually Sugar tax MUST be imposed sooner rather than later at Rs50 per kg to reduce demand and raise revenue, which will have the attendant community health benefits. However that is for a different entry on another important debatable matter of social choices.

The President has not added congruence either as his wont is to ban smoking, whilst the Finance Minister is desperate to increase Govt. revenue, and so their policies to achieve this duel objective have gone ary achieving neither, creating a worse healthcare crisis not better, as we can clearly see that the GMOA actually works to worsen the Health of the people not improve. 



Anonymous said...

It is clear we don't have any educated people in Parliament. Going to school does not mean education. Having knowledge of how people live and how they make lifestyle choices is!

It is time we have some new people in Parliament for a change, anyone can improve on them.

Anonymous said...

What a joke this Rs500M tax or contribution from CTC towards a campaign to reduce smoking is? It is not just ethically wrong, it is actually forbidden! That is the true nature of our leaders arrogant, ignorant, and irrational.

Ironical isnt it that since the Tax, the yield is actually dropping and not rising Tax revenue as hoped. Time we educate the public on the incompetence of our rulers in Govt. and Opposition. Actually every one in Parliament for that matter+ the President.

Anonymous said...

This is the only Country in the world where the local Tobacco Monopoly is either largest or second largest quoted company on the stock exchange.

It therefore is telling how pathetic the Country's economy really is when Big Tobacco is TOPS!

The Country's priorities are all wrong, as it should concentrate on having diversified conglomerates with Diversified ownership amongst thousands of shareholders, not bashing the successful companies.

You will never grow large caps in a market that is singling successful companies for tax and scamming them, so please use Vietnam which has successfully transformed from communism to capitalism that is even selling of its Tobacco monopoly to the private sector, and really helping inward investors and building a super stock market with WIDE ownership.

Anonymous said...

Sadly Sri Lanka has always elected the dumb and dumber to Parliament, and ironically those who had some sense when going in have become dumb and dumber due to having peers who are dumb. There is only one answer. New faces in parliament and prohibit anyone who currently is in Parliament from seeking office ever again.

Just do it once and the political revolution will transform this Country within one generation, like nothing else can

Anonymous said...

Anon above, the vested interests will never allow the new Constitution to put a one term only limit in Parliament as only people who want to be lifers for personal benefit are IN parliament now, and will not include this most sensible item in their proposals.

The only answer is to elect a slate of people next time with this as priority number one, but will it receive the 2/3rds even if they win a majority to govern next time. That is the sad state of affairs in Paradise

Ratmale,Minneriya,Sri Lanka said...

Below is a link to the Sunday Times article of 4th December 2016 confirming my story weeks earlier!

Anonymous said...