As another Christmas dawns at midnight today, celebrants in this economically-ravaged island nation are unlikely to forget to seek divine intervention in easing their economic burden before the next one, given that Christmas 2023 must surely rank as the most expensive festive season in terms of consumer prices. Nevertheless, it is indeed heartening to see Sri Lankans living the island life and going about as if there is no tomorrow, with shopping malls and main streets of most towns packed with shoppers and bargain hunters. 

Meanwhile, those who can afford it, including a sizeable contingent of Members of Parliament, have chosen to do one better and celebrate the festive season in more salubrious environs overseas. However, once the dust settles, the fairy lights are switched off, and reality dawns with bills to pay, most Sri Lankans will awaken to the reality that it is they who hold the key on how to get the economy of this nation in general and their personal economy in particular in better shape come 2024, with all manner of elections now firmly on the horizon.

While 2023 can be termed a year of economic survival for Sri Lanka, much more needs to be done to ensure that survival turns to revival in the year ahead, for the simple reason that failure in that aspect is no longer an option. While the regime has pinned its hope on filling Treasury coffers through taxation in the absence of a progressive revenue generation plan, there appears to be growing resistance to the envisaged tax policy from within the ruling regime itself. 

Last week the re-elected Leader of the Sri Lanka Podujana Peramuna (SLPP), Mahinda Rajapaksa threw the cat among the pigeons by publicly calling for an amendment to the proposed tax policy that is to take effect by next week, terming it a burden on the public. He however appears to have conveniently forgotten that it was the SLPP he heads that raised their hands to approve Budget 2024 in Parliament barely two weeks ago, green lighting the new tax policy.

This duplicity is nothing new as far as the SLPP and its leadership is concerned, having used it to good effect whenever necessary, well aware that Sri Lankans in general have a memory span of roughly two weeks. It will be recalled that those calling for tax reform now barely uttered a word during the month-long Budget debate that spelled out in detail the pros and cons of the proposed policy. However, the strategy of owning what is well received by the public and disowning what is not has clearly passed its shelf life. 

But with elections round the corner, desperate situations call for desperate measures and not-so-subtle attempts are being made by the ruling party to distance itself from the Executive arm of Government, which will likely portend trouble for the holder of that office, with the prospect of him being left holding the baby, despite the modus operandi appearing to be for the ruling party to distance itself from unpopular policy by blaming it on the Executive while the Executive blames it on the IMF and its bailout programme, leaving no one in Government accountable for the regressive tax policy. The SLPP Leader appears to be going off script by directly accusing the previous Yahapalana Government headed by the current President as being responsible for precipitating the economic crisis, claiming that $ 10 billion worth of ISBs issued during that period were literally the straw that broke the camel’s back, while attempting to absolve the current regime of responsibility for the crisis.

While the two camps will now engage in hurling accusations and counter accusations at each other, the fact that there is a Supreme Court ruling on who exactly is responsible for the crisis will be relegated to the background. It is this sheer lack of accountability, even when specifically pointed out by the highest judicial authority in the land, that lies at the root of the problem and not really who borrowed what.

While this strategy of painting over the writing on the wall may have worked in the past, the people are now in no mood to be taken for a ride once again and the accountable government they demanded in May of last year is being applied to the regime in office, despite the regime carrying on blissfully unaware of this reality and the silent revolution taking place around it in terms of public awareness on matters of governance.

An indication of this trend is noted in the latest IMF Country Report, which refers to two rather ominous pointers with regard to the state of governance. First is the widening trust deficit between the people and the Government stemming from growing public perception that what needs to be done to create a credible governance mechanism is not being done despite the state of the economy and overwhelming public sentiment in favour of reform. In fact, it is this perception that led the IMF to specify through its Governance Diagnostic exactly what needs to be done in order to bridge the trust deficit. But that report, like the countless others envisioning better governance and accountability, appears to be consigned to the dustbin of history.

Secondly, and more importantly, the report points to growing public fatigue with endless economic reforms being rolled out as the entire burden has been placed on ordinary people, with professionals in particular having to bear the brunt of it. It has been pointed out that a professional not only has to pay 36% in income tax but even expenditure is proposed to be taxed at 18%, with VAT coming into play on almost all essential products and services, resulting in a cumulative impact of around 54% on disposable incomes. 

While professional associations have gone on record that taxes are essential and form an integral part of a sustainable economy, their grouse is the inequitable policy structure in place, which will be exacerbated by the proposed reforms that will come into effect next month. While pointing to the need for an equitable, fair, and sustainable policy in order to stem the continuing brain drain, they are also justifiably demanding better accountability and transparency in public spending, pointing out that high taxation could be justified through better public services such as health, transport, and education – all of which are in rapid decline. The working population is only too aware that the bitter cup of austerity has exclusively been reserved for them while the ruling class continues to remain immune to any sort of austerity measures.  

A case in point is the recent announcement that the Government will recommence the Decentralised Budget Programme that has been on hold for the last three years with an allocation of Rs. 11 billion. It is not rocket science that this venture is nothing but a thinly-veiled attempt to portray ‘development’ at the grassroots level in what is going to be a crucial election year. As to how the Government is able to cough up this amount when it is on record that it cannot spare Rs. 10 billion to conduct the Local Government Elections only goes to show how Government spending and allocation of resources remain such a grey area despite the imperative need for transparency and accountability.

At the end of the day, if people are being called upon to pay through their noses to keep the country afloat, they have every right to dictate how their money should be spent.