PARLIAMENT

Boost for govt revenue

Parliament Corr.

Deputy Speaker Chandima Weerakkody presided when Parliament met at 1 pm yesterday.

After the presentation of papers and oral questions, the House took up the Ports and Airports Development Levy Bill (Second Reading), Recovery of Loans by Banks (Special Provisions) (Amendment) Bill - Second reading, Excise (Amendment) Bill - (Second Reading), Telecommunication Levy Bill (Second Reading), Inland Revenue (Amendment) Bill (Second Reading and Tax Appeals Commission Bill (Second Reading) for debate.

Human Resources Senior Minister DEW Gunasekara

The Government through the budget 2011 had announced several changes with regard to finance, tax and investment.

Legislation related to these changes is today placed before the House for approval.

This is in line with Government's medium term policy framework based on the Mahinda Chintana.

It is our firm conviction that people of this country should not allow a return of the Premadasa era. This does not mean that we believe that Premadasa was solely responsible for everything that took place during his presidency. It was an international factor brought about by Reagen-Thatcher based on Milton Friedman's economic philosophy.

That is why we did not believe in renaming the Premadasa Stadium. We have not forgotten his contribution to Sri Lankan society. It is in this historical context that the decisive shifted from neo-liberalism in the development policy framework which took place in 2005 with the introduction of the Mahinda Chintana. A further shift from neo-liberalism which took place in 2010 with the manifestation of the Mahinda Chintana, resulting in the State sector role in the market economy being enhanced.

The ideology of neo-liberalism otherwise known as "Small Government" took the back seat. We must understand that even after 2005, the market orientation continued and will continue, but subject to necessary regulations and policy based taxes or subsidies. The State has now been made to acquire a greater leadership role in the country's economy, a leading role in infrastructure development investments.

Public employment programs have been implemented. Privatisation of State owned enterprises has been abandoned as a policy. Government intervention has been considered necessary. We were not prepared to accept IMF conditions such as structural adjustment facilities. In this context we are required to effect changes in the tax policy, tax laws and tax administration.

Under neo-liberalism, Sri Lanka's tax capacity had started declining. The Government revenue as 25 percent of the GDP in 1977, was reduced to 13 percent by 2004 despite the war on terrorism, global crises in food, energy, financial and economic crises. We were able to raise the Government revenue to 15 percent by now. We have reversed the downward trend in Government revenues in general and in tax revenue in particular. That is an achievement, reversing the trend which started operating since 1978. So with reforms in the tax policy, tax laws and tax administration, we hope to raise the Government revenue to a higher level. If the revenue can be raised, we will be able to accelerate significantly the socio-economic development.

Karu Jayasuriya (UNP):

Large scale entrepreneurs can easily obtain loans from financial institutions. But it is very difficult to obtain loans for small and medium scale entrepreneurs from banks and financial institutions. They have to adhere to many conditions when applying for loans. Small and medium scale entrepreneurs also face many hardships when they pay back loans. Some of the entrepreneurs end up as losers, while some others end up in bankruptcy.

Therefore, a proper system should be formulated to recover loans from small and medium scale entrepreneurs. Contribution of small and medium scale entrepreneurs are very important for the country's economic growth. The Government should look into their needs and provide them with solutions for their problems.

Ports and Highways Deputy Minister Rohitha Abeygunawardene:

According to the Opposition, the construction of the Hambantota Harbour was a fruitless effort. This is a baseless statement. Nearly 27 investors have already signed agreements with the Government to set up new ventures like a cement factory, a gas factory and tea processing factories.

Though the Government had invested US$ 360 million for the construction of the Hambantota Harbour, we have already attracted around US$ 975 million investments to the country. The oil complex in the harbour will be completed by May this year. We expect to provide oil to ships that dock into the Harbour once the construction of the oil complex is completed.

Ravi Karunanayake (UNP):

Amendments that were made to the Bills should be beneficial to the ordinary masses of this country.

Today small and medium scale entrepreneurs are unable to pay back their loans. The Government should listen to their grievances.

Financial institutions, specially banks make profits in large amounts. It is necessary to create a concessionary scheme for the benefit of small and medium scale entrepreneurs when they repay their loans.

The interest charges are also very high.

Livestock and Rural Community Development Deputy Minister HR Mithrapala: Nearly a sum of Rs 10,000 can be earned from a Kitul Palm tree.

There are about 2.8 million Kitul trees in the country, but only about 500,000 trees could be used for our products. We would have to grow more Kitul trees for development of local products.

Sri Lankans can boost local products by tapping the Kitul Palm flowers so far Sri Lankans were not allowed to engage in tapping the Kithul trees by law. But today we have passed a very special bill which encourages the local production as well as strengthen our economy. Deputy Chairman of Committees Chandrakumar Murugesu takes the Chair.

S Sritharan (TNA): Nearly 80 percent of the cultivation the North had been devastated by torrential rains. Cultivators should be given an interest free loan to overcome their difficulties. They should also be given a grace period of one year to commence settling of their loans.

Sunil Handunnetti (JVP): Does this Telecommunication levy which is to be collected from recipients of Telecommunication services, be collected from those who use cable TVs? Do the recipients have to pay this levy when they send an SMS or browse through the internet?

Mohan de Silva (UPFA): When President Mahinda Rajapaksa was elected President in 2005 to find a solution to terrorism it was fulfilled. He was elected for a second time.

The people showed that they still trusted the President.

There are about 62 types of taxes in the country. Out of it 60 percent were indirect taxes which is a burden to the people. So the President made an attempt to find a solution and the bills we have passed today are a result of his attempt. With the passage of the Excise (Amendment) Bill, there are no restrictions to tap Kitul Palm trees and Thal Palm trees.

This move will strengthen the economy of country. We can save a good amount of foreign exchange we pay to import sugar when Jaggery is produced from Kithul and Thal Palm trees with the provisions of this Act.

Eran Wickramaratne (UNP): I wish to speak on the recovery of Loans by Banks (Special Provisions) (Amendment) Bill. Excise (Amendment) Bill and Tax Appeals (Amendments) Bill. Making the tax policy simple is very important.

Parliamentary Affairs Minister Sumeda G Jayasena: The opposition members joined the debate alleging that the government had put a intolerable burden on the people.

The Co-operative and Internal Trade Ministry has distribute essential commodities at lower prices to consumers through the Laksathosa branches across the country.

The Government's major aim is to uplift the living standards of the people. The Government's development drive has not been confined to Colombo alone, but has been expanded to all corners of the country. Roads, schools and hospitals have been constructed and upgraded while electricity and pipe-borne water facilities have been provided to people at Grama Seva Divisional levels. The Government is marching towards success. We are already prepared for our targets. The one million homegarden units program is operational and successful while women have also taken a keen interest in this program. This move will enhance the economy status of the people.

Dr Harsha De Silva (UNP):

The telecommunication sector has become one of the major factors in boosting the economy. It has become more productive. That is why the entire telecommunication sector has been targeted to earn revenue. But the Government should not impose taxes on the telecommunication sector in an arbitrary manner.

The arbitrary changes in taxation to the industry will cause negative impacts.

It is revealed that around 17 million sims are used by the people of this country for business transactions.

We have to upgrade the telecommunication sector to make Sri Lanka a knowledge hub in the world.

The telecommunication sector receives a large amount of foreign investment. Therefore, the Government should adopt a proper regulatory tax system for the telecommunication sector.

Thilanga Sumathipala (UPFA):

The Government invests money in various sectors at correct times.

A number of investors has started to visit Sri Lanka as a result of the conducive environment created after the elimination of terrorism in Sri Lanka.

Investors carryout feasibility studies before investing money in any country. Their major objective is profit.

So Sri Lanka has become a fast growing country with the correct policies followed by the Government. When we call for tenders for acquiring of 3G technology, three investors have come forward.

Today the 4G technology is available. Our aim is to provide the latest of technologies to the people. We will provide computers to every school across the country.

Irrigation and Water Resources Management Minister Nimal Siripala de Silva:

The Mahinda Rajapaksa Government has been faced with the task of constructing massive harbours and ports in this country. The UNP Government has failed in constructing such large scale projects in the country as it was unable to eliminate terrorism.

We need money to complete the ongoing projects without obtaining foreign loans. These are not taxes levied on the consumptions of the people. The second international airport is being constructed in Mattala.

In keeping with the large number of tourists arriving in the country, it is necessary to construct the new airport. We have introduced strong financial policies to the country through the last budget. The country will experience speedy development and economic growth in the coming years with these policies.

Finance and Planning Deputy Minister Geethanjana Gunawardene:

Today the UNP is attempting to attack the Government and criticize its policies to cover up its internal clashes.

It tries to inform the international community that the environment is not conducive in Sri Lanka for investments.

President Mahinda Rajapaksa when he was the Labour Minister, took steps to prevent the Salt corporation being privatized. So far it has been functioning as a profit making Government institution.

The UNP has forgotten their history. Owing to the direction of the President on finance matters, our banks could stand on its feet when economies collapsed in the global sphere. We will never allow that to disrupt our ongoing process of development.

The people have given a mandate to this Government as they trust this Government and the President.

Although the people face much difficulties more than 87 percent of the 234 provincial councils had been won by the support of the people by defeating the UNP convincingly.

The message conveyed by their mandate in that whatever the UNP and its leaders say, the people would not be cheated. Our Government has no policy to sell national assets.

The UNP said we did not tax the Shagrilla Company. when the time is ripe we will tax it.

We have a far sighted vision. When projects commences to function, a large number of jobs will be created. In addition, it will generate a good income to the country.

Adjournment Motion

Prime Minister D M Jayaratne yesterday stated in Parliament that all parties should get-together to change the present electoral system.

He said the Local Government Election was held under the same electoral system introduced by the UNP, without changing it as it would take a long time to change the present system.

The Prime Minister further said that owing to the flaws in the electoral system introduced by the UNP, all the parties faced untold hardships.

He made this observation in response to an adjournment motion moved by UNP MP Karu Jayasuriya.

A H M Azwer takes the Chair.

Ravi Karunanayake (UNP):

We respect the mandate given by the people at the last Local Government Election. But the public assets and State media was misused during that period. We ask that it would not be repeated during the forthcoming elections. The UNP requests for an Independent Elections Commission.

A H M Azwer:

I would like to bring to your notice that the Opposition Leader and Swaminathan did not support the establishment of those Commissions.

Ravi Karunanayake stood up and spoke at this stage.

A H M Azwer: You cannot order the Chair. You cannot intimidate the Chair.

John Amaratunga (UNP):

We have complained to the Elections Commissioner on numerous occasions, but it was useless. So the UNP requests for the establishing of the Independent Elections Commission.

Water Supply and Drainage Minister Dinesh Gunawardena:

It was the Opposition that opposed the Elections (Amendment) Bill. So we could not move it. Who drafted the clauses that made the Elections. Commissioner unable to retire? Who changed the clause that said the Identity Card was compulsory for voting in the Constitution?

You changed those clauses to rig votes. We made the Identity Card compulsory by an Act. We removed 40,000 names from the list whose names were enlisted in several electorates.

Prime Minister D M Jayaratne: This Local Government election was conducted in a free and fair manner according to the Election Commissioner's report.

The report also mentioned that all political parties had committed mistakes.

We saw several incidents taking place. There are loopholes in this electoral system. We have proposed amendments to the current electoral system.

Under the existing laws, conducting of elections and counting of votes have been carried out in a peaceful and honest manner.

Election violations have been reduced to 212 this year from 1,000 in 2009. It is very clear that election violations have been reduced.

We have never abused and misused State properties. If the UNP was unable to elect its leader, how can it win elections?

Ravi Karunanayake (UNP): We were able to win the Gampola seat as a result of conducting free and fair elections. We are thanking the Government in this regard.

A number of election laws have been violated by the Government. Then how was this election conducted in a partial manner?

Coconut Development and Janatha Development Minister Jagath Pushpakumara: It was the UNP who changed the local government election during its regime.

Therefore, the UNP has to take the responsibility of election violence.

As a result of the introduction of the National Identity Cards, the UNP was unable to win the election.

The Bills were passed with Amendments.

Parliament adjourned until 1 pm today.