LTTE’s insistence on ‘taxes’ boomerangs
Govt. businesses in north face closure

by Sumadhu Weerawarne
Government businesses in the north may face closure with LTTE’s continuing to insist on "taxes". The LTTE which in the first few months after the opening of the A-9 highway exempted government entities has subsequently extended taxes to government establishments.

Both the CWE and Building Materials Corporation branches will consider closure if their goods are not allowed through without LTTE imposed "taxes".

Commerce and Consumer Affairs Minister Ravi Karunanayake said that the CWE would not pay "taxes" by any means. "We will not do anything to legitimise what is illegitimate. I have spoken to the Prime minister on this and he is very much in support of this stance," he said.

Asked about the 5 per cent price difference between goods sold in the Jaffna and Colombo branches of the CWE, the Minister said that this was due to transport costs. "It is like red onions selling for Rs 15 in Colombo when they are available for Rs 5 in Jaffna. "The price difference has to do with logistical expenses. It has also given rise to speculation that the 5 per cent includes "LTTE taxes". But this is clearly not the case. We have no provision to account for such payments, so we do not make them," he said.

Other sources indicated that as the CWE employs external transport companies to transport its goods to Jaffna, and these companies were paying "taxes". "The transporters are third parties. They are paying the money demanded by the LTTE at the checkpoints," the sources said.

Minister Karunanayake responding said that the CWE would not reimburse any funds that either the drivers or transport companies pay as "taxes". "I have given clear instructions with the full authority of the Prime Minister that no such payments should be made. If these companies choose to pay, that is their concern. If we find that the tax problem aggravates to such a level that we are unable to transport goods. we will simply close the CWE branch," he said.

Senior sources at the Building Materials Corporation said that it was not transporting materials from Colombo to Jaffna, because of the LTTE’s insistence on "taxes". The BMC stopped taking goods three to four months ago, following a reversal of LTTE policy not to "tax" government bodies transporting goods on the A9 highway.

The latter policy adopted by the LTTE in the early stages of the opening of the A-9 was abandoned just one and a half months later.

"We sent our regional manager and the manager for Vavuniya and others to discuss with the LTTE the issue of "taxes", only to be told that government institutions too would have to pay taxes. We were taking three lorry-loads of cement to Jaffna at the time on the A-9, but with the LTTE demand for "tax" brought the goods to Anuradhapura," he said.

He added that with no goods from Colombo, business had dropped greatly. "Today our turnover for the month is Rs 0.5 million. Earlier it was Rs 7 - 8 million. The staff is just sitting in the branch with no real work," he said.

He said that the BMC purchased part of its stock from private companies that take goods to Jaffna via the A-9 having paid LTTE taxes. "We do just a little purchase from the private sector for some clients. It would be too costly to ship our goods," the source said. The source explained that the next step for the BMC would be the closure of its branch in Jaffna. "We are now looking at the possibility of closure. Our sales point is located at a rented building because our own buildings are in the high security zone. We are seriously thinking of pulling out."