Govt. in a bind over massive salary and pension bill: Revenue dwindles amidst pandemic

By Shamindra Ferdinando

State Minister Dr. Nalaka Godahewa says the country is in a bind due to dwindling revenue in the face of annual state sector salary and pension bill reaching a staggering Rs 1.2 trillion.

Dr. Godahewa, who holds Urban Development, Waste Disposal and Community Cleanliness portfolios, is of the view that the issue at hand should receive the attention of all political parties represented in Parliament.

The Viyathmaga pioneer, Godahewa said so when The Island sought a clarification as regards his admission at a recent event at the National Housing Development Authority (NHDA) that the government was left with Rs 200 bn after the allocation of Rs 1.2 bn for state sector salaries and pensions. The event was held to welcome those who had been recruited to the public sector.

The declaration comes in the wake of COPA (Committee on Public Accounts) faulting tax collection mechanism comprising Sri Lanka Customs, Inland Revenue and Excise Department for failing in their primary task. The annual income has fallen to just over 9 percent of the GDP (Gross Domestic Product) according to the Central Bank.

The State Minister said: “There are over 1.4 mn public sector workers. There is a large number of pensioners. Annually, we need about Rs 1.2 trillion to pay salaries and pensions. In 2020, our annual income was Rs 1.4 trillion. We are left with Rs 200 bn to provide health services, education, transport et al.”

Dr. Godahewa explained the government had no option but to obtain loans to manage the economy under extremely difficult situations.

The Gampaha District lawmaker questioned the responsibility on the part of the public sector as the country struggled to cope up with the daunting challenges caused by the raging Covid-19 epidemic. He pointed out that the public sector salaries and pensions had been fully paid in spite of severe difficulties whereas the private sector had imposed unilateral salary cuts.

During his address at the NHDA, State Minister Godahewa made reference to honest as well as corrupt public sector officers and those who neglected their responsibilities. Welcoming those who had newly joined the public service, Dr. Godahewa urged them to join the genuine lot.

The State Minister said that a few irresponsible individuals shouldn’t be allowed to tarnish the image of the entire public sector.

Dr. Godahewa admitted that the government too was responsible to see whether the public sector addresses the requirements of those who needed their services.

The national economy had suffered severe setback due to the total disruption of the tourism trade that brought as much as USD 5 bn annually, he said. The State Minister explained the crippling impact the disruption of tourism was having on the national economy at an event at Walapone where he inaugurated a major construction project. The State Minister emphasized the need to kick start tourism once the ongoing vaccination drive was brought to a successful conclusion by Sept-Oct 2021.

The SLPP is under heavy fire for depriving the Treasury of over Rs 500 bn at the onset of the incumbent administration. The SJB both in and outside parliament has alleged that the Treasury lost well over Rs. 500 bn due to a controversial decision to do away with a range of taxes, including PAYE (Pay As You Earn), NBT (Nation Building Tax), Withholding tax, Capital Gains tax imposed on the Colombo Stock Exchange, Bank Debit tax and unprecedented reduction of VAT (Value Added Tax). The SJB said that the 15% VAT and the 2% NBT which amounted to 17% imposed on all goods and services were unified and reduced to 8%, effective from the first of December 2019.

SJB senior Mujibur Rahman said that the decision was taken at the first cabinet meeting of the incumbent government held on Nov 27, 2019.