Essential consumer items and services adversely affected
VAT worse than GST — LSSP

The LSSP said yesterday that the price escalations caused by the introduction of VAT in place of GST will affect items of mass consumption.

The LSSP’s General Secretary, Batty Weerakoon, commenting on the UNF’s first budget presented to parliament on Friday said it must not be forgotten that all essential items, including infant milk and several other commodities and services, are presently exempt from GST.

"But from June 1 all these items will attract VAT. This is a deliberate policy aimed at freeing the business community from their tax obligations and placing them on the shoulders of the lower income segments of the population," he said.

The LSSP, he said, calls upon the working class to resist such measures proposed in the budget.

"The scheduling of the budget for a day after the local government election had its message. The government wished to ensure that the budget provisions could have no impact on the election result. The Lanka Sama Samaja Party saw the significance of this agenda and took what steps it could to warn the voter on it. But as the People’s Alliance leadership as a whole showed no appreciation of this fact the matter went by default."

The LSSP he said, views the 2002 budget as the basis for a plan of action wholly inspired by IMF thinking. "Liberalization" and "Deregulation", the catchwords of the IMF sound the main theme and programme pushed forward by the Budget. When the budget speaks of harnessing the private sector for work now attended to by the State, it is foreign capital that is contemplated. This can be gathered from the field of activity for which incentives and concessions are given in respect of foreign capital. The field includes construction of residential buildings, roads, supply of water, mass transportation, telecommunications, professional services, banking, finance, insurance, stock-brokering, production and distribution of energy and power.

"Elsewhere in the proposals it is specifically stated that except for Upper Kotmale all other power generation projects – which are the main reservoirs from Laksapana and Castlereigh to Samanalawewa and Randenigala will be handed over to the private sector which of course, means the foreign sector. Power generation and water supply from these reservoirs are not two different activities and hence it could be said that the operations here would include the "water management" touted by the IMF, Weerakoon said.

"It is also specifically stated that the monopoly of the Petroleum Corporation in the import and distribution of petroleum will be broken and the private sector allowed to participate in it. This, of course, would mean the return of the big petroleum conglomerates. Diesel and kerosene too will be sold by the Petroleum Corporation, without subsidy, at prices fixed by the big oil men. Investment in seaports, airports and the railway are all thrown open to private investment. The state thus opts out of the economy in a very decisive manner."

Other items caught up in the exercise of deregulation and liberalization he said are the labour laws which give some degree of protection and job security to a workforce that has not even in the most minimal way the "safety net" facility that is available in the advanced countries. Far from creating more job opportunities it will pave the way for large scale closures of productive units and the import from abroad of the items produced by these as happened in the case of the Kelaniya Tyre Corporation.