Tax cuts didn’t cause Rs 500B loss

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It is unreasonable to claim that the country lost nearly Rs 500 billion due to the tax policies of the new government, as this was as a result of import restrictions, including the suspension of vehicle imports, and the economic contraction caused by the Covid pandemic, former Finance Secretary S.R. Attygalle said.

He was speaking at a meeting of the Committee on Public Finance (COPF) on Wednesday (8).

Attygalle further said the decisions regarding tax policies were taken in keeping with the first Cabinet Paper presented by former Prime Minister Mahinda Rajapaksa on 4 December 2019.

Former Secretary to the President Dr. P.B. Jayasundara, former Finance Secretary Attygalle, former Central Bank Governor Ajith Nivard Cabraal, former members of the Monetary Board, Central Bank Governor Dr. Nandalal Weerasinghe and other senior Central Bank officials were summoned before COPF.

The COPF members were of the view that in presenting a Cabinet Paper, there should be a background note and a report on the subject matter concerned and that the officials in charge of the subject should take responsibility for it. Though there were some unavoidable circumstances which arose at the time, decisions should have been taken after a proper study by the Central Bank and the Ministry of Finance, the committee members said.

They further queried whether any action had been taken by any of the Economists and Professionals in writing to submit a report containing clear conclusions of the Monetary Board with regard to the monetary policy decisions taken by the then political authorities.

Former Secretary to the President Dr. Jayasundara said these decisions would be tabled in Parliament and then referred to Committees.

The COPF members again queried as to whether the economists and professionals had duly pointed out and informed their superiors as responsible officials of the Government at that time, regarding the incorrect policy decisions taken by the political authorities.

Central Bank Governor Dr. Weerasinghe said responsible government officials should refrain from engaging in politics and that the difference between a politician and an official should be properly recognised. He further said it is the responsibility of the officials to inform the politicians when they err and the politicians alone are not responsible for the consequences of these decisions.

The MPs who participated in the committee meeting, said although they had told the responsible officials and the then political authorities on various occasions about the possible ramifications of these policies, no one had paid attention to them.

COPF Chairman Anura Priyadarshana Yapa also emphasised that the relationship between the Central Bank officials and Parliament should be enhanced and a proper communication process should be established when making important decisions pertaining to the country.

Yapa said this discussion will be continued on 17 June.