Sri Lankan education sector and wellbeing of children were deeply affected during the Covid-19 pandemic and the economic crisis which ensued. Poor governance, ad hoc policy decisions and poor fiscal management got Sri Lanka into the crisis it is in today.
Our children had no say in the decisions which lead to the downfall, they were only dealt with periods of poverty, food and energy scarcity and disruptions to their education. A recent survey by the United Nations Children's Fund (UNICEF), stated that children are disproportionately affected by the rapidly unfolding economic crisis in Sri Lanka, adding that the crisis of 2021 and 2022 had particularly impacted the poorest and most marginalised. “More than 5.7 million people, including 2.3 million children, require humanitarian assistance. Sri Lanka is among the top ten countries with the highest number of malnourished children and the numbers are expected to rise further 56,000 children in Sri Lanka who are grappling with severe malnutrition,” the report stated.
As such, how fair is it to impact children with another tax burden, one which their parents can’t bear? While it is obvious that the Government has to expand its tax base, get more people and companies to pay their dues, it cannot be an excuse for unjustly levying taxes on some of the most vulnerable communities in the island. The impact of the food shortage which lasted for several months, and the reduced spending capacity on families, on the wellbeing of children who had to endure such times, may only be felt in a decade or so. The long-term impact on children, especially the urban poor, whose education was significantly disrupted, and their nutrition affected could in the future lead to a new set of social and health issues which the Government of the day may be burdened with.
Cabinet Spokesperson and Minister of Mass media Bandula Gunawardane, announced that the VAT rate will be raised to 18% with effect from 1 January 2024, following the Cabinet approval. It was later revealed in Parliament that the VAT hike will also affect a number of medical consumables, specialised nutrition supplements given to infants and children, school stationary and even chemical fertiliser. The Samagi Jana Balawegaya (SJB) Parliamentarian Dr. Harsha de Silva yesterday raising the issue in Parliament asked the Treasury to reconsider the imposition of value added tax (VAT) on items such as infant food products, fertiliser, and medical equipment citing that fairness in taxation.
He charged that fairness in taxation was necessary while the Governments’ effort in increasing revenue move forward. “Infant nutritional food such as ‘posha’ has been subjected to VAT. We all know that severe malnutrition prevails among children and imposing VAT on them is unfair,” de Silva charged.
Only recently that Sri Lanka recommenced the local manufacture of the full range of child nutrition supplements. How increasing VAT on supplements such as Thriposha can be justified is a question the Government is yet to answer. How can the Government let it happen, while allowing unpaid loans of Rs. 800 Million issued to the tune of political favourites in industry to lie, adding burden to state banks? Similarly, the Inland Revenue Department is yet to claim billions of dues from some of Sri Lanka’s biggest business and industry giants, all of whom likely make contributions to political campaigns of many senior politicians. MP de Silva also noted VAT has been imposed on fertiliser and diesel despite they have to be imported anyway for the agriculture sector and that was requested to reconsider.
The damage done to the agriculture sector with an overnight change in the fertiliser policy, pushed many farmers out of business and into debt. It also collapsed Sri Lanka’s fragile food security system, which now needs rebuilding.
The need for more taxation is well understood. But the Government must be sensitive and fair when imposing them. Haven’t the poor suffered enough?