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Insecurities over the social security fund

24 Jun 2022

  • Public expresses mixed opinions on proposed tax and its implementation
BY Sumudu Chamara People of all social strata can be seen in queues these days, and regardless of their financial situation, almost everyone is affected in some way by the economic crisis. The Government has thus identified the need to provide fiscal relief to the public as a short-term measure, while long-term measures are being discussed. Last week, it was announced that a Bill will be presented to the Parliament to impose a 2.5% tax on all importers, manufacturers, wholesalers, and retailers who earn more than Rs. 120 million per annum to establish a social security fund. This proposal, presented by Prime Minister Ranil Wickremesinghe in his capacity as the Minister of Finance, Economic Stabilisation, and National Policies, has received Cabinet approval as well.  In this time of economic and social crisis, what the people think about a fund to provide them with relief is a major concern, and several persons from different backgrounds who spoke with The Morning were of the opinion that a social security fund is extremely crucial at this juncture. However, they expressed doubts as to how it will be implemented, how they could benefit from a social security fund, and whether taxing businesses is the best way to establish the fund. A timely step In this regard, 54-year-old lottery ticket seller S.P.N. Chandrasena, said that the Government must prioritise daily wage workers and those who are not employed, if any reliefs are provided under the proposed social security fund. He opined that more than workers of any sector, it is the daily wage workers in the informal sector who have been affected by the economic crisis.  Adding that those in the informal sector are facing the risk of losing their livelihoods, he said: “We depend on what we earn on a daily basis. If we earn today only we can have at least two meals tomorrow and come to the workplace. That is the situation of most of the people who are daily wage earners. However, our jobs are at risk because the people do not have money to buy half the things they bought several months ago.  “Before the economic crisis began, I sold 300 to 400 tickets a day. But now, I can barely sell 200 tickets. The worst thing is, these numbers keep decreasing. People have stopped buying things that are not essential, and they are saving every cent to get food and liquid petroleum gas (LPG). I don’t blame them. But, the situation is such that in a few months, I will most likely be jobless. I don’t know how I am going to survive and feed my family if I had to quit this job, because I am not experienced in any other profession.” Chandrasena further said that in a context where the quality of life of daily wage earners has seriously deteriorated, the Government should not wait until a social security fund is established, and should start some welfare programmes for those employed in the informal sector. “The least that the Government can do is provide us with a food and a medicines allowance, so that we can at least survive. Medicines, in my case, are particularly important, because both me and my wife are suffering from illnesses for which we have to take medicines on a daily basis,” he added.  Several other persons were also of the opinion that a social security fund is necessary, even though exactly how the people would benefit from it is a question.  Sixty-one-year-old retired public sector employee Sunil Perera (name changed on request) said that while paying attention to national-level programmes to ensure social security, the Government must also launch special programmes for the welfare of the underprivileged and crisis-affected groups such as farmers, informal sector workers, fishermen, and unemployed people. He however added that the people should not be left to wait for several months until the proposed fund becomes active after collecting taxes, and that it is necessary to implement this programme immediately. “However, we should also change how we identify underprivileged groups. Due to the economic crisis, even those who have stable jobs have become underprivileged groups. Everyone has become poorer, because they can no longer make ends meet with the money that they earn. Almost the entire population needs some kind of social security,” he further said. Social welfare programmes vs. development programmes However, some opined that even though a social security fund is an important and timely step taken by the Government, the Government should not deviate from its priority which they said is stabilising the economy. Thirty-year-old private sector worker Dumindu Hirantha de Silva said that while taking measures to face the prevailing economic difficulties, it is crucial to address the factors that led to the situation where the people are in need of the support of a social security programme. He added: “Social security programmes are not a new concept to a lot of countries, and even Sri Lanka has some social security measures which were introduced years ago. Firstly, we still do not know how exactly the proposed social security fund will function, or give relief to the people. However, I think that this should not be like the Samurdhi welfare programme. The Samurdhi programme has helped a lot of people. I am not denying that.  “However, at the same time, it rendered many dependent on Government welfare programmes, which is not at all a good thing for a developing country. What is more, in a way, such programmes also helped governments to neglect pressing issues such as unemployment, poverty, and inadequate rural development by keeping people dependent on welfare programmes for a very long time.” He said that due to such reasons, the proposed programme should be a short-term one, and that the Government should not be allowed to forget the necessary reforms to Sri Lanka’s economy. To do that however, having political will and stability are necessary, according to de Silva. Taxing businesses  The new tax on businesses was also a concern some discussed. They pointed out the pros and cons of doing so in a context where businesses have been severely affected by the economic crisis. Forty-year-old businessman K. Imalka Ananda raised concerns about the economic aspects of a social security fund, and pointed out the negative impacts of the new tax on businesses. “A severe food shortage is very likely and the economy will take years to recover. Therefore, I think that it is a good thing to take measures to help the people. However, in order to give money for a certain programme, especially when it comes to welfare programmes that are not intended to make profits, we have to take that money from somewhere else, and in this case, it is the business community. Businesses who earn profits should pay taxes.  “However, most businesses have been suffering losses during the past two years. The new tax intended to be used for the social security fund will further weaken the businesses that were affected by the Covid-19 pandemic and the economic crisis, and in order to be able to pay taxes, they might have to increase the prices of their services or products or cut down on expenses. These, in turn, will affect the country’s economy or even people’s job security.” Meanwhile, Perera also raised concerns about the same: “More than businesses, the Government must collect all the black money that is said to be circulating and hidden in the country and abroad. Earlier, politicians, those who engaged in illegal rackets, and large-scale businessmen were known as those engaged in money laundering. However, with the economic crisis, small businessmen as well as the general public have also started making money illegally, mostly through selling fuel and food at higher rates. They should also be investigated.  “If Sri Lanka can get back the money that is said to have been laundered and stolen by the said groups, such money can be used to help the economy and society. However, unfortunately, the Government does not seem to be interested in investigating such large-scale issues despite information about such being leaked from time to time. Instead of stopping powerful people from robbing ordinary citizens, we have resorted to taxing businesses.” Some also expressed similar opinions about funding the proposed social security fund, while stressing that the Government should take measures to stop wasting money and use that money for the fund. One person, an employee of the public sector, said that if the Government stops squandering and misusing public funds at higher levels instead of shortsighted measures to stop necessary expenses such as maintaining street lights, establishing a social security fund can be done without imposing new taxes. She said that while investigating irregularities in public institutions through the Committee on Public Enterprises (COPE) is commendable, Sri Lanka is yet to see the day when politicians explain how they earned their money and properties and how they have misused and wasted public funds. As was observed by those who discussed the social security fund with The Morning, there is a lack of details as to exactly how the Government is planning to assist the crisis-hit people and is yet to be revealed. However, the people seem to be of the opinion that such a fund would be tremendously important given the state of their economy and livelihoods. 


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