Punishing the poor for the frauds of the rich

It is not the ordinary people, especially the poor who are responsible for the current economic crunch, they are only the victims who are bearing the brunt of it. However, the Government seems to believe that they have to bear the major part of the burden of the recovery plan as well. 

From the beginning, the bailout package offered by the International Monetary Fund (IMF) hinged on a process of restructuring the Government’s foreign debt. 
Despite the IMF not wanting the domestic debt to come under any restructuring plan, the external debtors drove the Government towards one. 

Then, irrespective of the fact that the ordinary people are squeezed out by the reform formula imposed by the IMF, especially by the “Cost recovery-based energy pricing to ensure the State’s ability to support all its essential expenditures,” the Government turned towards the poor employees to heap the whole burden of the domestic debt restructuring plan, leaving out the banking sector. 
The authorities argued that the banking sector already contributes to the Treasure and the economy through taxes over 50% and further pressure on the banks would result in the collapse of the banking system affecting the 57 million public and private bank deposits. 
Therefore, the employees of the private sector who saved 20 percent of their earnings as retirement funds had to bear the burden. Thus, the interest rate for the superannuation funds which include the Employees Provident Fund (EPF) and the Employees Trust Fund (ETF) will come down to 9 percent from 2025. 
However, the IMF is not satisfied with the progress of the implementation of the reform package that it agreed with the Government. After the first review of the progress of the government’s commitments for the $ 2.9 billion Extended Fund Facility (EFF) of the IMF for Sri Lanka last month, the global lender said that Sri Lanka has to fulfil revenue targets and finalizing discussions regarding foreign debt restructuring before it releases the second tranche of the EFF. 

Estimates suggest that Sri Lanka is likely to fall behind in achieving the revenue targets of 12 percent of GDP by 2024.  
That suggests another round of financial burden to be heaped on the people. A day after Peter Breuer, the Senior Mission Chief of the IMF announced the delay in disbursing the second tranche, the Lanka Electricity Company (LECO) announced a Social Security Levy on its customers, while the Ceylon Electricity Board (CEB had already sought permission from the Public Utilities Commission of Sri Lanka (PUCSL) to increase the electricity tariff. 
It must be noted that the electricity charges for ordinary domestic users have increased about five-fold in real terms during the past two years. Worse, most of the taxes imposed on many other sectors have also been passed on to the poor man. 
The ordinary man is squeezed in this way while tax evasion by professionals, high officials businessmen and politicians has been the norm. 
The Inland Revenue Department (IRD) in August had sent a message to all stakeholders. The message read “If you don’t kill corruption, it will kill Sri Lanka,’’ while admitting bribery at tax administration itself.   
Ranjith Hapuarachchi, the Commissioner-General of the Inland Revenue Department (IRD) told the media on July 13 that although the threshold level for tax had been reduced from three million rupees to 1.2 million or 100,000 per month, he could not see an increase in the tax files. 

The Daily Mirror last week reported that the total amount of tax revenue in arrears exceeded Rs 950 billion. The Chairman of the Sectoral Oversight Committee on Economic and Physical Plans of Parliament, Mahindananda Aluthgamage told the paper that the State cof­fers are deprived of a whopping Rs. 500 billion annually due to inefficiency and corruption of bureaucrats and the absence of properly developed systems at three institutions-namely the Inland Revenue Department, Sri Lanka Customs and the Excise Department. 
This is a situation that has been in existence for decades. Then what is the rationale for penalizing the poor for the corrupt rich and the inefficiency of the State in dealing with the situation?