Sharply declining STATE REVENUE NEEDS URGENT ATTENTION: DEW

Q What are your observations on the post-election political developments in the country?

After 20 years, there was a change in the presidency and in the parliamentary composition. Political power has shifted from the SLFP to the UNP while the executive power changed quite dramatically. The legislative power too shifted marginally and for the first time the two major political parties in the country agreed to form a coalition.

Q How do you characterize it?

I will not call it a National Government. It is yet another coalition. But this time it is more a coalition of forces of the same class. The term ‘national’ was used perhaps to conceal the new development.

Q The Head of State is again the leader of the SLFP and the UPFA. How do you see this unpredictable development?

It is an abnormal situation. That is what most people have not understood. It is more mechanical than natural and that is the complexity.

Q Is the Speaker’s ruling with regard to the appointment of the Leader of the Opposition correct?

In terms of parliamentary tradition and practice, I am inclined to accept it.

Q In your view, what are the daunting challenges facing the new government?

Interestingly, there is the Geneva issue relating to the so-called war crimes and also the world situation with the global crises that are not favourable to Sri Lanka. Of cause most are due to factors beyond our control. Domestically, our macro economic fundamentals are unstable or worsening. In my view, the highest priority should be given to the problem of sharply declining state revenue. Unfortunately, this is the least spoken issue but the most serious in my view.

As a minister of the previous regime I carried a continued struggle and failed. I tried my best to convince the former President on the growing danger but to no avail. I once openly criticized the taxation policy, tax administration and tax law in the presence of all concerned including the head of state. Today I stand vindicated.

Q Do you think the new coalition will be bold enough to tackle this issue?

Class wise, I cannot expect them to do so because the UNP’s policy is worse. In fact, it is primarily responsible for the fate of the government revenue. This trend of declining government revenue started in 1978 with the introduction of neoliberal economic policies. Then finance minister Ronnie De Mel was smarter than even Milton Friedman – the father of Neo Liberalism. The new coalition has no alternative but to face up to reality and resort to tax reforms. This taxation policy may contribute to the creation of a host of severe problems in the process creating social imbalance and fiscal deficit.