This government does not seem to have a good track record when handling matters relating to economic policy and it is not even once bitten twice shy.

It ran in to a storm of protest over the issue of appointing a Governor to the Central Bank. One faction of the government was adamant on retaining the services of Arjuna Mahendran; another group was equally adamant in demanding his ouster. Sanity prevailed only after the intervention of outsiders and the appointment of an eminently suitable compromise, Indrajith Coomaraswamy.

It then encountered another controversy over increases in the Value Added Tax (VAT). To begin with, the VAT was already in existence, at a rate of eleven per cent, and had been levied for many years. All the government did was to increase the rate by four per cent.
The Joint Opposition portrayed this in such a manner that the public felt they were being hit with a new tax, proving that the government was not getting its message across to the masses. One can hardly blame the opposition for that–that is what oppositions do: bring the government into disrepute by hook or by crook!

In response, instead of getting its act together, the government got its legislative knickers in a twist. It had begun levying the tax before the relevant regulations were approved by Parliament. This was challenged in court by the opposition and the government had to eat humble pie again.

When the controversy over the VAT was raging, the government’s response was that the previous regime had lived beyond its means and on borrowed money. Therefore, the government desperately needed to raise revenue to sustain the economy; hence the increase in the VAT, it argued.

That is a reasonable argument, but it is also an argument that needs to be sustained by subsequent actions. Unfortunately, that does not seem to be what is happening: last week, the government announced that it was restoring duty free vehicle permits for senior State officers.

Previously, the government is on record saying that loss of tax revenue on duty free vehicle permits – and the abuse of such permits – deprived the Treasury of billions of rupees in revenue. Hence its decision to suspend the permits.

Then, despite its commitments to ‘good governance’, it made its first mistake: it restored the duty free permits to Parliamentarians. The public were angrily asking why parliamentarians were being chosen for privileges that the public was not entitled to.
Now it is open sesame for duty free permits once again. Last week, it was announced that duty free permits will be granted to senior public service officers once again. Already, that Shylock of all trade unions, the Government Medical Officers Association (GMOA) is demanding its pound of flesh-it is asking for a new permit every five years, instead of the ‘two per lifetime’ rule that is currently operative.

If the government was short of funds – and it says it is – abolishing the permits is the right thing to do. Then, restoring it for Members of Parliament was foolish. To rectify that anomaly, it has now restored permits to all and sundry. Surely, two wrongs don’t make a right? So, another ‘Yahapaalanaya’ commitment bites the dust!

The public now have every right to question the priorities of the government. If it is so cash-strapped that it has to raise the VAT and impose price hikes on the general public to balance its books, what right does it have to grant massive duty free concessions to a privileged few, be they in Parliament or the public service?

Needless to say, the credibility of the government has taken a beating. Sometimes, not only must a government do what is right, it must appear to do what is right as well. In this instance, is doing neither.