Major trade unions, student unions and a number of political parties are up in arms over the recently revised income tax structure of the country. Under the proposed tax revision, persons drawing up to Rs.100,000 do not pay taxes. Those receiving up to Rs. 141,667 pay approximately Rs. 2,500 (6%) per month. Persons receiving an income up to 266,667 are subject to a 24% tax amounting to Rs. 25,000/- per month and only those receiving over Rs. 750,000/- per month are subject to a 36% or Rs. 196,500/- monthly income tax.
Government receives revenue for its expenditure, via income tax, which forms the backbone of government income, which keep the wheels of the economy turning over smoothly.
Subsidies which the people of our country have enjoyed since independence such as ‘free education’, ‘free medication’ via state hospitals, clinics etc, subsidies on fertilizer etc will no longer be possible if revenue drops. In the aftermath of the collapse of our economy and default on international debt repayment, increased taxes are inevitable via IMF demands. The alternative will be to raise taxes via indirect taxation, which will mean the ordinary man and women in the country will have to bear this burden.
A long time ago there lived in Germany a man named Karl Marx who wrote a book titled ‘Das Kapital’ - a critique of the political economy. Marx believed that strikes unified the working class, that they were a manifestation of class struggle and directly undermined elite members of society.
By a strange quirk of fate, in this country we are now seeing a twist in working class struggles. Today, the average income earner in a family of four (which comprises over 50% of the population) does not exceed Rs. 70,000/- per month.
This bracket therefore is untouched by the revised income tax policy.
The groups leading the struggle against the tax revision are the university students, professional groups such as doctors, engineers plus port workers, electricity board workers and school teachers.
Other than professional groups such as doctors who are holding helpless patients to ransom, and engineers, the other groups who are demanding a lowering of the new income tax regime are not touched by the revised tax plan.
The most vociferous group demand an income tax revision however, are students of the state universities, who reap the benefits of our ‘free education’. Yet this ‘free education’ is paid for by the state via taxes paid by ordinary citizens of this country.
Figures published by the University Grants Commission, show, government expenditure on University Education in 2021 stood at a whopping Rs. 25,000,000,000 or Rs. 25 billion! Government expenditure on education as a whole stands at Rs.154.9 billion plus (University Grants Commission SL 2021).
Our ‘free health service’ too comes at a cost. According to the World Health Organization’s Global Health Expenditure database 4.8% of our GDP was spent on our health sector. These services which we take as ‘free’ are in fact paid by the state mainly from revenues gained from taxes both direct and indirect.
The question which arises is why university students who are direct beneficiaries of ‘free education’ demand taxes be lowered? Are they in fact demanding government cut back in services to higher education? Are they calling for a scrapping of state-funded university education system? Would the now prominent university student leader be able to continue his seemingly endless period of higher education had he or his family had to pay for it?
At college level, if a student fails his ‘A’ level exam thrice, he has to leave school. Yet a present university student leader - now nearing his forties, and who probably has more cases pending than many a briefless lawyer - is still milking the system which continues to provide him a ‘free education’. He too is demanding a lowering of taxes for the super-rich of this country, whose taxes play a role in his continued ‘free education’.
Lanka has many firsts worldwide. We elected the world’s first prime minister and now we have another first. Our trade unions are calling for a strike on March 15 to protect the rights of the capitalist class.
In the UK and in the US, the Labour Party and the Democratic Party campaign to raise taxes. It is the Conservatives and Republicans who call for a reduction in taxes.
Its time our trade unions recognise with whom their loyalties lie - with workers or capitalists?
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