Image: Sri Lanka Podujana Peramuna presidential candidate Gotabaya Rajapaksa discusses his manifesto with former President Mahinda Rajapaksa at its launch on Friday – Pic by Lahiru Harshana.
- A ‘Charter of Election Promises Honesty’ is necessary for all
- Given targets and promises are contradictory
- Free fertiliser would increase expenditure by Rs. 45 b
- VAT reduction from 15% to 8% would reduce revenue by Rs. 425 b
- Scrapping PAYE is most illogical and harmful; consequences drastic
- On false promises intends to win; on security state intends to control
Policy honesty is an incumbent requirement associated with democracy and accountability to prevent deceiving poor voters particularly in a developing country like Sri Lanka by the unscrupulous politicians. When politicians give promises, those should be realistic and supported by reliable evidence, data and information.
Otherwise, rival political parties and political leaders competitively give false promises inflating people’s expectations and hopes which cannot be met or abandoned after they come to power which can give rise to disillusionment, outrage and even rebellion/insurrection.
Having known such an eventuality preemptively, a standard method of some politicians would be to tighten security, laws and discipline over the people on various pretexts. Some of the pretexts may appear relevant under a particular context (i.e. Easter carnage), but in the long run such arrangements are inimical to democracy and liberty of the people.
Two main dimensions
Two main dimensions of Gotabaya Rajapaksa manifesto are (1) absolutely false promises given, that cannot be met or achieved within the foreseeable future, and (2) comprehensively strategic plan to tighten State security (including of politicians) and law enforcement.
On false promises, you attempt to win election and on the basis of a security state, you intend to rule the country. The unfortunate predicament at present is that even Sajith Premadasa has got into the same trap or vicious cycle at least on the first count.
In democratic countries like Australia, although the tendency for false promises is less, the policy statements of political parties are financially assessed before elections. This practice derives from two sources. One is the ‘Charter of Budget Honesty’ inaugurated in 1988. The second is the installation of the Parliamentary Budget Office in 2010, agreed on a bipartisan basis. Therefore, all economic and social promises of political parties in their policy statements or manifestos are assessed officially and independently before elections. The voters thus come to know what is feasible and what is not before selecting a party to vote and elect. An election manifesto or a policy statement should eventually lead to budget formulation. Otherwise, there is no point in having them.
In Sri Lanka, at least there should be a ‘Charter of Election Promises Honesty’ agreed by all parties in Parliament. This Charter should guide the ethical conditions, what is permissible and what is not, when political parties give election promises.
There are ten policy facets unleashed by GR manifesto. These are also the chapters in the document. (1) Priority to national security. (2) Friendly and non-aligned foreign policy. (3) Clean governance. (4) People friendly constitutional reform. (5) Productive citizen – Fruitful human resources. (6) People centric economy. (7) A society based on technology. (8) Development of natural resources. (9) Sustainable environmental management. (9) Disciplined, law abiding and a moral society.
All the above cannot be discarded as irrelevant or false. Who can have disagreements or objections to a ‘friendly and non-aligned foreign policy? However, the foreign policy should be more proactive with full cooperation with the UN and multilateral organisations. Likewise, there are some good chapters or sections that could become part of common national policies of the country. That may be the contribution from the GR backed ‘professionals.’
Key issues
A proper election manifesto nevertheless should have first analysed the key issues facing the country in terms of both development and democracy. In research and scientific method, this is called the ‘problem identification’. There is a possibility of identifying almost all problems in Sri Lanka at present under these two key areas (development and democracy), both in internal and external dimensions. However, without doing so, the manifesto just jumps on to the security issue, with some scant attention to the problems and causes, almost as a miracle solution.
Security is an issue of democracy, unless it is perceived in an authoritarian manner. Although rare lip service is rendered to democracy and ‘media freedom’ in the manifesto, no proper commitment or ‘promise’ is given on human rights, personal security or equality before the law apart from equality in state treatment of people irrespective of ethnicity, religion or language. Reconciliation or national question is also part of democracy which is completely distorted in the manifesto.
What does Gotabaya Rajapaksa think about human rights? One should question.
These democratic issues (including human rights and reconciliation) cannot merely be reduced to economic or social issues as is the case of Rajapaksa thinking. In this sense, the ‘Prosperous Sri Lanka’ manifesto of Gotabaya is not different to the old ‘Miracle Asia’ manifesto of Mahinda Rajapaksa. Both are within the confines of traditional, archaic, majoritarian and family thinking at least in t
he sphere of democracy.
Of course there are some merits in presenting the economic side of the issues in the manifesto which are utterly contradicted by the promises given. This is what I have called the ‘professional veneer’ in the title of this article. Addressing the ceremony of the launch, GR said the ‘manifesto was drafted following a series of consultations with professionals and stakeholders.’ This can be partly true. But until when is the question? After the ‘professional’ drafting, it appears that ‘exorbitant’ promises have come from other two brothers of the family, Mahinda and Basil, of course with the hope to win the election. Otherwise it is difficult to understand the apparent contradictions.
It was at a public rally that GR said, “Mahinda called me this morning and told me, if elected, we should give free fertiliser to paddy farmers.” Wow! This is how these fellows have developed their promises in the manifesto. Thereafter, within few days, Sajith Premadasa also promised free fertiliser to all farmers!
Targets and promises?
Simply said, the targets and promises of GR manifesto are contradictory. The manifesto is for five years. In the economic sphere, the overall targets are to have an economic growth rate of 6.5% and a per capita income of $ 6,500 at the end of the period, and that means by end of 2024. If this can be achieved, of course all souls would be extremely happy. The growth rate at present is 2.7% and the GDP per capita income is barely $ 4,000 thanks to the UNP’s neoliberalism.
It would be a miracle, however, to uplift the growth rate to 6.5% by next year, and even if it is done and maintained year by year, the per capita income cannot exceed $ 5,000 by the end of 2014. The calculations are wrong or at least too optimistic.
The above promises are in a context where the Sri Lankan economy is in dire straits today. One of the main contradictions in the economy is the vast gap between the public revenue and public expenditure. The country’s budget deficit is above 7% of the GDP at present. Of course GR promises to bring it down to below 5%. How? By increasing the public expenditure and reducing the public revenue!
If the recently passed Vote on Account (for the first four months of 2020) in Parliament is any indication of the budgetary situation for the next year, the public expenditure would be around Rs. 4, 410 billion (including recurrent, capital and debt payment), while the public revenue would be mere Rs. 2,235 billion. The gap is Rs. 2,175 billion. It is over and above this expenditure that GR and also SP have promised free fertiliser to farmers, and according to reliable sources that would cost additional Rs. 45 billion.
Two main dimensions of Gotabaya Rajapaksa manifesto are (1) absolutely false promises given, that cannot be met or achieved within the foreseeable future, and (2) comprehensively strategic plan to tighten State security (including of politicians) and law enforcement. On false promises, you attempt to win election and on the basis of a security state, you intend to rule the country. The unfortunate predicament at present is that even Sajith Premadasa has got into the same trap or vicious cycle at least on the first count
Tax reductions?
It is in this context that GR has announced drastic tax cuts and concessions. There is no question that the tax system should be reformed, simplified and rationalised. Does that mean the complete abolition of some taxes (i.e. PAYE) and drastic reduction of VAT for example? The proposed VAT reduction from 15% to 8% would deny revenue to the government up to Rs. 425 billion per year.
It may be that the present VAT rate is high. In Australia and New Zealand, it is around 10%, but even in Australia there had been proposals to increase it to 15%. In Britain, it is high as 20%. New Zealand has a more nuanced system where VAT rates are extremely low for food items, medicine and essentials, but high for other goods and services. This is something Sri Lanka should have considered. That is how some relief could be given to the poor people in terms of cost of living.
Tax reforms have been on the agenda now for over a decade in Sri Lanka. The Mahinda Rajapaksa appointed Presidential Commission, chaired by Prof. W. D. Lakshman, submitted its report far back as in October 2010. But it was not implemented or not implemented properly. A key member of the Commission, late Dr Saman Kelegama, expressed the following, among other things, after the release of the report which highlighted the predicament of political determination of tax rates without proper economic assessment or commitment to the country’s future. This has been going on now for some decades, bleeding the country without much hope.
“First on tax exemptions, (a) take the 1.2 million labour force in the public sector – do they pay taxes ? No. In 1979 public servants were exempted from taxation because the government could not afford to grant a salary increase to public servants in line with the private sector. Ever since then, this has become a rigid policy and Sri Lanka may be the only country in the world where public servants do not pay taxes; (b) BOI tax exemptions and tax holidays have led to approximately 1% of GDP revenue losses per annum, and (c) various exemptions on VAT and import duty from time to time have also contributed to eroding the revenue.” (Business Times, 21 November 2010)i
Simply said, the targets and promises of GR manifesto are contradictory. The manifesto is for five years. In the economic sphere, the overall targets are to have an economic growth rate of 6.5% and a per capita income of $ 6,500 at the end of the period, and that means by end of 2024. If this can be achieved, of course all souls would be extremely happy. The growth rate at present is 2.7% and the GDP per capita income is barely $ 4,000 thanks to the UNP’s neoliberalism. It would be a miracle, however, to uplift the growth rate to 6.5% by next year, and even if it is done and maintained year by year, the per capita income cannot exceed $ 5,000 by the end of 2014. The calculations are wrong or at least too optimistic
In conclusion
There are many other unfeasible promises given which are not discussed here. These might be the same or near the same when Sajith Premadasa manifesto comes into the open. A difference however would be that SP apparently has no intention or plan to suppress the people, if anything or everything goes wrong like GR. SP is a populist democrat while GR is a populist authoritarian. The focus in this article however has been on GR’s manifesto, and to show the contradictions between the development targets and election promises, and the contradictions within the promises themselves.
I simply cannot fathom the logic behind the abolition of the PAYE tax. Until retirement in Sri Lanka, I have been a PAYE tax payer (2006-2010) in addition to submitting tax returns as a principle, although without much additional income. I had got used to these principles by paying taxes in Canada, Switzerland and in Australia. That is our primary duty as citizens. It is possible that the demand to abolish PAYE must have come from our own young colleagues and other professionals. This is what GR has said as ‘our stakeholders.’ This is the saddest side of the story. PAYE has been a very efficient, direct and a progressive tax and after its reform in April 2018, it had become much better and reasonable. A researcher on the subject, Nazny Shamath, had commented,
“Under the new tax system, 98% of the PAYE taxes will come out of the richest 30% of Sri Lankans and this is actually an increase of 3 per cent of the Government’s PAYE revenue.”ii
This is what Gotabaya is scrapping on behalf of the ‘rich’ or the well to do. A ‘Charter of Election Promises Honesty’ is absolutely necessary.
Footnotes
1http://www.sundaytimes.lk/101121/BusinessTimes/bt10.html
2 https://www.moneta.lk/article/2018/06/understand-your-pay-as-you-earn-paye-tax-in-sri-lanka
Courtesy of the Daily FT.