Wednesday, 31 December 2003  
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A blow to agriculture

Wise men say that only two things are unavoidable in life: Death and taxes. All governments, no matter what they say in their election manifestos, resort to taxes to earn additional revenue. Paradoxically, most of the revenue is not gained from taxing only the rich, but rather from taxing the entire population, rich and poor.

These indirect taxes, levied on most consumer items and services, affect mostly the poor.

Value Added Tax (VAT), so-called because the tax is imposed on top of the actual price of a given item, is one such indirect tax aimed at maximising government revenue. The recent budget unified VAT at the single rate of 15 per cent, which the government described as a move to rationalise the tax regime and find the best compromise for the benefit of the consumer. Earlier, there were two VAT bands: 10 per cent and 20 per cent. The unified VAT structure means that the prices of some items have increased while those of others have decreased. Some essential items are, however, exempt from VAT.

A budget should correctly identify a country's priorities. In Sri Lanka's case, agriculture is a priority as more than 70 per cent of the population is in some way connected to it. Unfortunately, budget planners seem to have taken no notice of the importance of agriculture and the need to protect the farmer. They should be given all incentives and facilities to continue cultivation. Any measures that further escalate their production costs will drive them away from farming.

Although the government has pledged to continue the fertiliser subsidy, the insistence by the Inland Revenue Department on imposing VAT on Urea will hit the farmers hard, as revealed by our front page news item headlined 'VAT blows up agriculture subsidy' yesterday. Compounding the problem is high price of urea in the world market due to a shortage of production. Local fertiliser prices could rise by nearly 25 per cent, putting the farmers' livelihoods in jeopardy. They have suffered enough as a result of low farmgate prices. High- priced fertiliser is a burden they cannot afford at this juncture.

It is time that Sri Lanka evolved a National Agriculture Policy that would bind all governments to honour certain commitments to develop agriculture in all areas of Sri Lanka. The continuation of subsidies on equipment and fertiliser, guaranteed farmgate prices and minimal taxes should be essential components of such a broad policy.

Marketing facilities, banking facilities, value addition and export opportunities should also be included. It goes without saying that such policies should cover all sectors of agriculture, not just paddy cultivation. Other grains, tea, coconut, fruits and vegetables and livestock are important components that must not be overlooked. Extra facilities could be provided for resettled farmers in the North-East.

High taxes and other impediments could make farming an unproductive and unprofitable business, driving the younger generation, essentially sons and daughters of farmers, towards other vocations. A rapidly diminishing farmer population will not augur well for Sri Lanka, where vast swathes of land have been dedicated to agriculture for generations. The government must ensure that such a predicament does not befall Sri Lanka.

An eventful year

Another year ends today. It was a year with mixed fortunes for the world. It brought happiness to some, misery to others. An eventful year, the memories of 2003 will linger in our minds for years to come.

The fading days of 2003 saw one of the biggest earthquakes in recent times, in the ancient Iranian city of Bam. More than 30,000 people are believed to have died. The year began with an equally big story:

The war on Iraq. US troops began marching into Iraq on March 20 and the military operation has continued since then. The biggest stories within this story were the capture of Saddam Hussein and the slaying of his two sons. The Iraq saga continues into the New Year, with the US saying it intends to completely transfer power back to Iraqis in the middle of 2004.

The year saw the emergence of a new disease - the Severe Acute Respiratory Syndrome (SARS), which surfaced in China in February and rapidly spread throughout the world. There is no cure or vaccine and it can be fatal. Just when health authorities thought that SARS was on the way out, suspicions have been raised in China and Taiwan that there may be more positive cases.

Attempts to explore the final frontier received a blow with the total destruction of a US space shuttle earlier in the year. China signalled its entry to the elite 'Space Club' by sending a 'taikonaut' to space for the first time. There was bad news for Europe as its Beagle 2 Lander stayed silent on Mars.

Closer to home, relations between India and Pakistan improved considerably, diminishing the threat of a conflict between the South Asian giants. They resumed transport and sporting links, allowing greater people-to-people contact. Pakistani President Pervez Musharaff narrowly escaped two assassination attempts, but Pakistan has vowed to go ahead with the SAARC Summit in January. Hundreds were killed in a number of such terrorist attacks worldwide, despite an intensified 'war on terror'.

Such a traumatised world badly needs peace. We earnestly hope that 2004 will be a peaceful year for Sri Lanka and the rest of the world.

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