Government's Knickers in a twist- Island Editorial for Sunday 12/21/2008

Who is wearing the knicker's in the Temple Trees bunkers? -T4J.

Knickers in a twist

The government has well and truly got its knickers in a twist over the petrol price issue. The decision of Lanka Indian Oil Corporation to sell at Rs. 100 a liter from midnight Friday/Saturday, reportedly after consultation with its lawyers, has placed the government and the fully state-owned Ceylon Petroleum Corporation, which acts on government directives, in a king-sized fix. What is CPC going to do now? Huge oil hedging obligations stare it in the face and there is emerging evidence that the relations between some CPC bosses and the banks that made a killing on the hedges have been cozy. Is the consumer who has been made to carry the can as world oil prices hit dizzy heights, now going to be deprived of the benefit of the plunge in global oil prices?

Even his worst enemies must concede that President Mahinda Rajapaksa is a consummate politician who has a finger on the pulse the people. Those skills are not needed to judge that on this issue, the public will be one hundred percent with the chief justice. To say so is not to say that judicial decisions are made on the basis of their public popularity. Judges have to consider the facts and apply the law when issues are brought before them. They do not live in splendid isolation in ivory towers. They are well aware that any government needs tax revenue to function. But that does not mean that the taxpayer, and we do not mean only income tax payers who are relatively few, but all the people who pay indirect taxes even when they strike a match or buy a loaf of bread, can be unfairly and unreasonably skinned.

The way the government acted after the court ruled that petrol must be sold at Rs. 100 a liter was, to say the least, pathetic. There were all kinds of confabulations and the ridiculous argument adduced that the judgment must be officially received for a decision to be taken on what will be done. Any greenhorn knows that the Attorney General, represented in court when the judgment was given, has to take notice of it and, presumably, convey it to the proper authority. In this era of instant communications, every Tom, Dick and Harriet in this country were well aware of the ruling soon after it was delivered in Hultsdorf. This business of awaiting the judgment was an all too obviously a time buying exercise. The ministers who discuss urgent matters as and when they arise, not necessarily waiting for Wednesdays when the cabinet usually meets, are now awaiting the coming Wednesday to decide what to do. Meanwhile motorists were crowding petrol stations to tank-up even at old prices. For some the whole business was a massive irritation, especially if they were low on fuel, while for others like three-wheeler operators it was a matter of livelihood.

Inevitably, the `war cry’ has also been heard loud and clear. How are we to prosecute the war against the LTTE terrorists if funds for the purpose are not available? Prime Minister Ratnasiri Wickramanayake was quoted in one report saying that no one who loved the country had the right to block taxes as they bring revenue. ``We need the money to develop the country as well as to protect it from terrorism,’’ he has said. ``As a government, our revenue comes from taxes. No one who loves the country should block taxes and prevent the country from being protected.’’ If that was not shadow boxing the Supreme Court judgment, we don’t know what is.

The prime minister’s logic is irrefutable but it would have sounded much better if it came from somebody outside the political establishment. The people have got cynical about the way that these lovers of the country shower the country’s resources on themselves with perks that power wielders even in affluent developed countries do not enjoy. Those who proliferate ministries faster than rats breed, creating over 100-strong jumbo cabinets to ensure their political survival, whiz off abroad at the drop of a hat, pay themselves (or their daughters) Rs. 100,000 rent allowances and engage in extravagances and profligacy they would (or could) never indulge in out of their own pockets can hardly talk about blocking tax revenues for the very good reason that they appropriate far too much of such revenue to give themselves a jolly good time. If they do, the taxpayers will roll on the ground laughing themselves silly.

But revenues are in fact needed and oil, along with liquor and tobacco, is a major provider. The CPC is also locked into the hedging matter. A via media has to be found without any headlong controversy between the executive and the judiciary. In the first instance the government must ensure that petrol is freely available even at the old price until there is a resolution of what the new price should be. The courts are now on vacation and that gives some breathing space. If the court order had been formally served on the Lanka Indian Oil Corporation, the second player in the petroleum distribution and retailing market, then it stands to reason that CPC too has got the bad news. If having received it, the corporation chooses to play deaf and dumb, awaiting the time its competitor will run out of stocks and captive motorists return to its pumps, a whole new ball game would have begun. Given that the country is fighting a do or die war, and many repercussions of the global economic meltdown will hit us in coming weeks and months, we can well do without that.

But in the meantime, let the government let motorists have their petrol, whatever the price.