June 02, 2008 (LBO) – An influential weekly has slammed Sri Lanka’s practice of giving subsidies in the guise of helping the common man, and exposed the depth of the deception involved in doling out diesel ‘subsidies’. “It is seldom if ever admitted that a major revenue stream for the exchequer comes from the various taxes charged on fuel.
“When whoever is in a seat of authority talks about the cost of fuel and the sale prices, pointing out that the various types of fuel are being sold below cost, the tax component is conveniently ignored.
“This is the kind of spin that the people are subjected to by their leaders who heap their own plates with gravy at the cost of those they represent.”
Though ‘subsidies’ are promised to all and sundry and tax increases are resisted by politicians of all hues, budget deficits and accommodative monetary policy later result in high and chronic inflation which hurt the poorest sections of society most.
Sri Lanka has suppressed two inflation indices in the recent past as inflation moved to 29.9 percent. Inflation measured by the new ‘official’ index is now 26.2 percent which is the highest in Asia.
The full editorial of the Sunday Island is reproduced be