Parliament supreme in taxation

Effecting changes or fiddling with taxes designed and imposed in the recently passed budget in Parliament by a comfortable majority would badly affect the Fiscal Year 2009, Economists and academics warned yesterday.They pointed out that all financial powers of the State and the Executive were wrested with Parliament.Even the annual budgetary allocation for the vote on the President too had to be approved by Parliament.“Therefore, a budget passed for implementation should not and cannot be changed without approval from Parliament as it badly affects Fiscal Year 2009,” they claimed. Meanwhile, Trade and Consumer Services Minister Bandula Gunawardena yesterday stressed that the Constitution, defined Parliament as the country’s legislative organ entrusted with powers on the State financial matters.

Parliament has all authoritative powers to impose taxes on goods or services depending on the anticipated benefits to the country.“Even if the Cabinet wants to change any particular tax, it should be done through approval of Parliament, the Minister told the weekly Cabinet Press briefing held at the Government Information Department yesterday.

“For example, President Mahinda Rajapaksa and his Government wanted to reduce the excessive tax burden on the people due to food and oil price hikes in the world market in 2007 and 2008.The Government followed the statute and presented an act in Parliament to reduce the taxes imposed on the essential commodities. Under normal circumstances a Rs. 93 tax had to be imposed on each Kilo of imported milk powder.But the Government imposed only a nominal tax of Rs. 5 per Kilo for imported milk powder without burdening the consumers.” In order to reduce the taxes imposed on 12 essential commodities, the President presented the Special Commodity Levy Act to Parliament.

However, the UNP and all other Opposition Parties voted against this Act due to some wrong information spread about this Act.This is the first time that the entire Opposition has opposed an important Act due to lack of understanding, the Minister noted.According to the Constitution, Parliament enjoys the statutory privilege of imposing or introducing tax amendments that are imposed.Hence, the Parliamentary approval for such purpose is compulsory, he added.

“Following the order given by the Supreme Court, the Trade Ministry formulated a price formula on gas considering the interest of both the consumers and the gas companies. As the Minister in charge, I submitted this price formula to the Cabinet. The Cabinet approved it.“No Government can run without imposing taxes. Because the State budget is based on the income levied by taxes,” he said.According to the Minister, during the period from November 2008 to date, the Government has reduced the price of a litre of diesel by Rs. 30, a litre of petrol by Rs. 35 and a litre of kerosene oil by Rs. 20. In addition the Government has reduced a litre of furnace oil provided to the CEB by Rs. 35 and a litre of furnace oil provided to the industrialists by Rs. 25. It has also reduced the gas prices on several occasions. The gas prices will be further reduced on December 31.