Squeezing hapless public dry

Wednesday 16th February, 2022

It may be wrong to say the incumbent government is the embodiment of inefficiency, for it does certain things very efficiently, increasing taxes and fuel prices being one of them. It also sought to impose a huge surcharge tax on the employees’ superannuation fund, and would have succeeded in its endeavour but for stiff resistance put up by trade unions, the media and the Opposition. Another fuel price hike is said to be in the pipeline.

At the rate fuel prices are being jacked up, the country is likely to revert to the bullock-cart era sooner than thought. It looks as if the process of retrogression had already begun; a lot of people have already made the switch from cooking gas to firewood, and most farmers have returned to subsistence agriculture, to all intents and purposes, for want of fertiliser to produce a surplus. The Ceylon Electricity Board (CEB), and the politicians in charge of it are ably facilitating the country’s return to the bottle-lamp days. Another round of official power cuts was scheduled to commence yesterday.

The Ceylon Petroleum Corporation (CPC) would have the public believe that its losses are solely due to the sale of its products to the public below cost. But the fact remains that it is in the red mostly because the CEB, SriLankan Airlines and other state institutions have not paid back their debt. There are also huge government taxes on fuel, and if they are reduced, the prices of diesel, petrol and kerosene could be brought down considerably. True, the state is dependent on its tax revenue to fund social welfare, development, etc., but it is wrong for the political appointees at the CPC and the ruling party politicians to pretend that the CPC is incurring losses owing to subsidies.

Fuel has never been reasonably priced in this country during the past several decades. State revenue drops and the environment suffers when governments slash fuel prices for political reasons thereby causing the overconsumption of oil. When fuel is overpriced, the economy and the public suffer due to increases in the costs of essential goods and services. Hence the need for a pricing mechanism to determine fuel prices realistically, and action to maintain buffer stocks of oil to stabilise prices. The late Finance Minister Mangala Samaraweera introduced a fuel pricing formula, which however was flawed. The present government is also trying to introduce such a mechanism, and it is hoped that no tricks will be played on consumers.

The CPC should be able to absorb short-term fuel price increases in world market without passing them on to consumers. It does not let the benefits of sharp drops in oil prices in the international market accrue to consumers, does it? It has to increase its storage capacity on a priority basis. In April 2020, world petroleum prices turned negative, for the first time in history, meaning the oil producers paid buyers to remove their products. Had our patriotic leaders, who have ruled this country since Independence, cared to develop at least a section of the Trincomalee oil tank farm, the CPC would have been able to take advantage of such situations, and turn itself around without burdening the public with unconscionable price hikes in times of hardship.

The government may be able to reduce taxes on fuel as well as other commodities, and services considerably if it cares to curtail its wasteful expenditure, which is one of the main reasons for tax increases. It should get its development priorities right, and put on hold some mega infrastructure projects, rationalise welfare expenditure, and cancel expensive ceremonies. The Independence Day celebrations must have cost the hapless taxpayer an arm and a leg. The SLPP’s recent rally in Anuradhapura was also a burden on the public in that they had to bear various hidden costs. Government leaders did not pay for their security, transport, etc., from their personal funds; they can help the country save millions of rupees a day by simply curtailing their travel.

Let the CPC panjandrums who are calling for a substantial fuel price hike be urged to give a breakdown of government taxes on their products. Immediately after capturing power, the government introduced massive tax cuts, which benefited its cronies. Now, it is trying to increase its revenue at the expense of the ordinary public, who will bear the brunt of fuel price increases.