Need for more targeted taxation
High society right now is abuzz
with calculations of the increased costs of imported luxury vehicles
following last week's tax increases on vehicles with over 1000 cc
engines. The broad social band of middle and lower-middle income
classes, however, can look forward to access to slightly cheaper small
cars.
The Government, in its latest taxation foray, risky though higher
taxation may be in terms of electorate reactions, is clearly
endeavouring to do what this column has been advocating: to be more
focussed in its harvesting of State revenue from the populace.
When the Value Added Tax was raised slightly, this column appreciated
the care with which the Government applied the higher tax and defended
the huge need for urgent enhancement of State revenue to meet the
mounting national costs of the vast mountain of debt callously piled up
by the previous regime. The mountain of debt faced by all Sri Lankans
today is so vast and so intimidating that Finance Minister Ravi
Karunanayake could not resist comparing it with the immensely tough
physical and mental conditions braved by the first Sri Lankan to climb
Mount Everest.
Even though the term 'speed-bump', used by the Minister, seemingly
belittles the achievement of the Himalayan triumph by a Sri Lankan
woman, the Minister was actually using the severity of the challenges
overcome in that mountaineering achievement to drive home to the Sri
Lankan public, the sheer enormity of the national debt burden. To the
Finance Minister's credit, even as he appreciated the Himalayan triumph,
he humbly admitted the difficulty of his own struggles to tackle the
debt crisis.
The problem of State revenue has for too long been handled too
timidly by successive regimes. The use of generic taxation or indirect
taxation avoids annoying specific constituencies and is a typical ploy
of voter-sensitive governments. There is, however, a limit to such
coyness both in terms of avoiding voter annoyance as well as in terms of
effective revenue gathering.
Indirect taxation whether in terms of duties and cesses or in terms
of sales taxes, actually discriminates against the poorer sections while
favouring the higher income groups. A 15 percent VAT, after all, bites
deeper into the budgets of the lesser income-earners while its bite is
felt much less by those with bigger budgets.
In reality, therefore, indirect taxation is more discriminatory in
socio-economic terms since the poorer classes are more affected than the
richer.
As economic analysts have been asking over the years, why is it that
the Government refuses to systematically target those who can and should
contribute their fair share to the national coffers? Why cannot the
income tax threshold be fixed in a more elaborate manner that will
precisely target different social layers to maximum effect with much
less social hurt? And why is the public sector always let off the hook?
And, most importantly, when will the professional political class stop
being pampered with tax breaks even as they impose generic taxes on
their voters?
Triumph of a Woman
When the first western explorers were attempting to climb the world's
highest peak, they faced far more tough conditions in terms of unknown
topography while the equipment they had - in the mid-20th Century - was
primitive compared with the equipment available today. Today, the
terrain is not only well known, but also certain difficult points up the
Everest massif are routinely facilitated by ladders and ropes fixed by
the hard-working local mountain guides and agencies. At the same time,
modern equipment today somewhat reduces some of the horrific risks of
injury and death.
Nevertheless, the climbing of Mount Everest or Chomolangma as it is
traditionally known by the local Sherpa population and, Sagar Maatha as
it is officially named by Nepal, is, all the same, a most physically
challenging feat that risks death at every step, virtually, especially
as climbers go above the 6,000 metre level. The oxygen levels in the air
at that altitude - above 6,500 metres (26,000 ft) known as the 'Death
Zone' - is far less than needed by a human, while the intense, sub-zero
cold and severely gusting wind can kill at the slightest exposure of
body.
Everest climbing is now an 'extreme sport' and hundreds attempt the
climb every year, and one in ten people die in the attempt. Four people
were killed on the mountain during the very days Sri Lanka's intrepid
Jayanthi Kuru-Utumpala successfully 'summitted' the Earth's highest
point, the very first Sri Lankan to do so. Her climbing partner, Johann
Peries, also bravely climbed up to just 400 metres below the actual
summit before giving up due to oxygen depletion.
The Sunday Observer salutes history-making Jayanthi and her climbing
partner. Jayanthi Kuru-Utumpala will inspire all Sri Lankans with her
courage and determination but, most importantly, is a beacon of hope for
Sri Lankan women with her demonstration that women can achieve as much
as men both in terms of physical achievement as well as of spiritual
strength.
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