It was a tumultuous week for the government. A pre–announced general strike mid-week on the 15th crippled public services and was a slap in the face of the government which had declared some of them essential services. According to political sources, at least 10 lakhs of public employees from 40 government and semi-government trade unions in the banking, ports, education, postal and transport sectors took part in the strike. Although health workers also joined in the strike, they ensured there was minimal disruption in hospitals.
In the usually bustling Fort railway station, the army was keeping watch over deserted platforms and counters at government banks had their shutters down. A momentary stand-off between port workers and the navy inside the Colombo Port eased after the workers were allowed to move through the navy barrier. Stung by the strike, the President’s Media Division was at pains to paint a picture of normality with statements that trains were running and banks were open. State Finance minister Ranjith Siyambalapitiya acceded that one day of trade union action will cost the country’s GDP 46 billion rupees.
The strike was called off with a seven-day hiatus after the government agreed to return to the negotiating table. A letter from the Secretary to the President Saman Ekanayake to the President of the Government Medical Officers Association (GMOA) Dr Dharshana Sirisena,inviting only them for talks, angered other unions who saw it as step by the President to drive a wedge in the trade union movement.
The primary demand of the unionists is a reduction in the recent tax hikes. They also want reduced rates of interest and a stop to government repression. The economic downturn and rising cost of living have hit the country’s middle and lower income groups. It was in acknowledgement of this that in May last year when President Ranil Wickremesinghe was Prime Minister he took steps to increase the salaries of government employees.
The general perception of the people however is that the strike has not done any good for the nation. Based on the probability of membership participation, some say it was a flop and others say it was successful.
Under the new taxation system, the threshold for paying tax begins at 100,000 rupee. The first bracket is limited to a minimum of 6 per centtax. This percentage could reach 12 to 18 per cent depending on the employees total package, accumulation and over time.
Those getting a salary of over one million will be subject to the highest tax slab of 36 per cent. These people are primarily in the private sector, and very few are in government employment. Even if they are, they hold high positions and have become part of the decision-making process. The key question, therefore, is why people who don’t earn over $400,000 joined the strike. The workers say it is in solidarity with a handful of people drawing salaries close to Rs 400,000. In reality, the strike has no purpose and may be politically motivated rather than over actual grievances. If somebody earns a very high package including overtime, they would obviously be taxed without a doubt. What people should realise is that a country cannot exist without an effective tax regime. However, that tax should be used for the benefit of the people and not the political administrators of a country. The money collected from taxes should be channelled to uplift the living standards of the people, as it is done in other countries.
In 2020, soon after Gotabaya Rajapaksa assumed the Presidency, the government in power abolished the Pay As You Earn tax (PAYE), causing ripples in the administration and drastically reducing the government’s revenue. It caused undue hardships for the government. This was done to appease Gotabaya Rajapaksa’s cronies rather than tostimulate the economy.. Thus, tax burdens were The move backfired on the government, which lost nearly 600 billion rupees in revenue. The loss was enormous, and the government was faced with a severe issue where they would not be able to collect taxes from middle-income group employees. As a result, the government had to find other ways to make up for the revenue shortfall. These included cutting back on spending and increasing indirect taxes and excise duties on other items.
Against this backdrop, strikes will only lead to further disruption of the economy. Businesses will be adversely affected by the reduced workforce, leading to decreased production and higher costs. This will result in increased prices for consumers and further financial losses for businesses. In addition, strikes may contribute to a further drop in government revenue, making it more difficult to finance essential public services.
Taxation is more or less an imperative tool to unlock the $2.9 billion investment package that is likely to be approved by the IMF. The professionals say that the government has taken a step back and is willing to work out a long-term solution. In other words, the government is actually buying time until the IMF reaches finality in Sri Lanka. The government may at the same time work out a solution come July when the debt burden is eased to a certain extent.
The communication from the Secretary to the President to the GMOA is indicative of such a move. In the letter he states that the President has expressed his willingness to continue the dialogue with the trade unions to resolve the issue raised by the GMOA and other unions. He says that the President is of the view that, through a constructive consultation process, we should be able to submit a viable proposal to the IMF. The next review meeting, scheduled for a few months from now, will be used for this purpose.
The government is likely to take a relatively soft stance with the trade unions. This is because it will not be able to trample on the rights of the people with the IMF virtually monitoring every step it is taking.
Furthermore, it isn’t possible for a government to manipulate trade unions nowadays since they are aware of their elementary and fundamental responsibilities towards people as trade unionists.
Some accuse President Ranil Wickremesinghe of taking cover under IMF conditions when it comes to critical negotiations with professionals and trade union leaders.
This is because it is a well-known fact that the country has reached a stage where it cannot move forward without the IMF bailout package.
The President’s open letter to the bilateral creditors signifies that there is no turning back from the IMF process. This is regardless of whether it is in favour of the country or whether the country has been virtually trapped by Western interests. This is a quid pro quo situation for Sri Lanka.
Following the debt moratorium, Sri Lanka hopes that there will be an influx of foreign exchange in the form of international direct investments in various projects. This will strengthen its foreign reserves. India specifically, will look forward to investments in the energy sector, while Japan would come back to resume its stalled projects.
The President said, “in the 75 years of Sri Lanka’s independence, there has never been a more critical period for our economic well-being and future development. That is why we have introduced a robust reform agenda aimed at achieving debt sustainability. Also, we have strengthened governance by widening the social safety nets to support the most vulnerable and ensuring we can grow an inclusive economy attractive to international business. This is how we will improve the lives of our people and ensure they are first in line to benefit from improvements in our economic conditions’.
‘The IMF-supported program will be critical to achieving this vision for our country. Hence, this transitional era starts with the full implementation of the IMF-supported program and the resolution of our debt situation with you as long-standing partners as well as with our commercial creditors. There is still a lot of work to be done together. I encourage you to maintain and even expand and strengthen official bilateral creditor coordination in the context of our forthcoming engagement. It is the most reliable way of achieving the efficient, transparent, and equitable implementation of our debt treatment exercise. For that, I call on our Paris Club bilateral partners, in particular, Japan, together with all our other official bilateral partners, including India and China. I call on you to garner and foster coordination as you may see fit.”
The sore point, however, is the attempt to put off local government elections. The government should come clean and tell the country about the difficulties and even debate the matter in parliament without employing dubious ways of putting off elections. The opposition always wants to gauge its popularity in the country, and this is especially true with the JVP-backed Jathika Jana Bala Wegaya led by Anura Kumara Dissanayake. The reality of the matter is that no political party could steer clear of the geopolitical concerns of the region. In the seat of power, all political parties would be compelled to go forward with an inclusive political strategy, with a broad distribution of power and participation, inherent checks and balances, the rule of law in place, and the ability to regulate economic institutions and activity, including raising taxes and providing public services and goods.
The JVP or the Samagi Jana Balawegaya (SJB)cannot alienate themselves from this reality, nor can any other political entity for that matter. While the SJB and JVP consider it imperative to let people vent their frustration, in reality, the costs involved in maintaining these assemblies are enormous. The government is not yet ready to deal with them. It is one thing to hold an election, but it is another to maintain the councils and vote for their upkeep and development projects with an increased force of 8000 members. This has to be looked at with meticulous care.
The government’s resolve to summon the Supreme Court judges before a ParliamentaryCommittee on Ethics and Privileges (PCEP) should be condemned as something akin to dismantling the last bastion of Sri Lanka’s democracy. The manipulations by the Executive and Legislature for their political survival has made Sri Lanka dependent on the judiciary’s single prop to uphold her remaining vestiges of democracy. The order given by the three-judge bench of the Supreme Court to the finance secretary is well within the parameters of its jurisdiction. This is because it only talks about the money already allocated by the Appropriation Bill presented to parliament..Hence, if a decision has been taken to summon the Supreme Court judges before the PCEP, it will be a dangerous gamble for the government. The case concerning former Chief Justice Shirani Bandaranaike and how she was humiliated by the likes of Wimal Weerawansa is an unacceptable precedent set by the then-Mahinda Rajapaksa (UPFA) regime in power. It is an area where democratic governments will fear to tread.
We hope this kind of drama will not be re-enacted. This will bring the government in power into disrepute and be considered a clear invasion of the independence of the judiciary.
The international community is already alert to the growing stand-off between the judiciary and legislature. In a recent statement, the International Commission of Jurists (ICJ) called upon the Government to respect an Interim Order of the Supreme Court to ensure that funds are available to hold local elections and for the Speaker of Parliament to withdraw his referral of Supreme Court Judges for inquiry of a potential breach of parliamentary privileges.
The statement went on to say that on 7 March, Government Member of Parliament, Premnath Dolawatte, requested the Speaker of Parliament to refer the conduct of the judges of the Supreme Court who gave the interim order pertaining to Local Government Elections as a breach of parliamentary privileges. The Speaker accepted the request and made the referral to the Parliamentary Committee on Ethics and Privileges.
The ICJ considers that these actions by the government constitute a serious and unwarranted encroachment on the independence of the judiciary and the judicial function.
“It is fundamental rule of law principle that the judiciary has jurisdiction over all issues of a justiciable nature, including questions regarding its own jurisdiction and competence”, said Ian Seiderman, ICJ Legal and Policy Director. “It is not for any political actor to determine whether the Supreme Court has acted within its authority’, the statement said.
It went on to state that the ICJ is particularly concerned that on March 10 State Minister of Finance Shehan Semasinghe told parliament that “it is a serious offence to implement the interim order before hearing the privilege issue by the Parliamentary Committee on Ethics and Privileges.”
The Minister then requested the Deputy Speaker to advise all relevant authorities not to act on matters relating to the polls until the said Parliamentary Committee concludes its inquiry on the matter.
The ICJ stressed that the Interim Order issued by the Supreme Court instructing the Finance Ministry Secretary and the Attorney – General not to withhold funds for local government elections, must be carried out.
“Refusal to respect an interim order made by the Supreme Court and referring it for an inquiry by Parliament breaches the separation of powers and sets a dangerous precedent in a country where the independence of the judiciary is already fragile,” said Ian Seiderman.
The ICJ recalled that the UN Basic Principles on the Independence of the Judiciary state that “it is the duty of all governmental and other institutions to respect and observe the independence of the judiciary” and “there shall not be any inappropriate or unwarranted interference with the judicial process, nor shall judicial decisions by the courts be subject to revision.”
The other critical point to ponder is the appointment of the Inspector General of Policein the midst of unhealthy competition between three senior Deputy Inspectors General of Policefor the coveted position. The Minister for Law and Order has already pooled his resources to make Deshabandu Tennakoon the next police chief. However, the president appears to have his reservations about the matter. Deshabandu has many matters pending before the courts, including the damning indictment on him for failing to prevent last May’s attack on Aragalaya protesters, and has been stalled by a writ application he has filed in the Court of Appeal. The Law and Order ministers’ mouthpiece has already started a campaign to support the appointment of Tennakoon as the police chief.
What we hope is that the President will take a critical look at whether Tennakoon holds an unblemished record to be appointed as police chief. We hope that saner counsel will prevail among members of the Constitutional Council whose mandate it is to make recommendations for the post of IGP. Or will the current IGP Chandana Wickremeratne have his tenure extended by another year?
