To be taxed, or not to be taxed, -- that is the question?

Not too long ago, the buzzword amongst Tamils of Sri Lanka was ‘Peace.’ However, recently that has been overshadowed by a word all too familiar – Tax.

Why beat the unbeatable?

Taxation has been and will continue to be a controversy, irrespective of which corner of the world one lives in. Not surprisingly though, earliest recorded history attests to the pesky tax problems. History also reveals that Egyptians were one of the first to impose taxes -- on cooking oil. To insure that citizens were not avoiding the cooking oil tax, tax collectors would ‘audit’ households to insure that appropriate amounts of cooking oil were consumed. In early times Greeks imposed a war-tax, which was utilized to fund wartime expenditures. One of the renowned and colourful events linked with tax, was Lady Godiva’s bareback ride through the streets in the 11^th century in a plea to her husband to reduce taxes.

The idea of taxation has been around for a very long time, and it is here to stay. Then, why the sudden outcry, when this centuries’ old concept is adopted by the Liberation Tigers of Tamil Eelam (LTTE)?

Give a Little, Get a Little

The pandemonium, taxation has managed to stir within the Tamils in Sri Lanka, is beyond belief. Many don’t even hesitate a moment before spewing their venom over the inflated prices of goods – culprit, taxation they claim. Anticipation over a deflation in prices was high among the Tamils with the reopening of the A-9 highway. However, due to the duplicity of the greedy merchants who were quick to lay the blame on taxation and pocket the money, the anticipated decrease in prices went in vain. The angry populace, without a thought to economics, placed the blame solely on the LTTE’s taxation policy. If this situation was rationally and logically analyzed, one cannot miss the greedy yet crafty merchants’ skilful manipulation of the naive public; by cleverly positioning LTTE’s taxation as the scapegoat for their exuberant price hikes.

With the reopening of the A-9 highway many local travellers opted to travel via hired vans to the North, since it was much cheaper than the airplane and definitely more comfortable than the Central Transport Board (CTB) vehicles. Here, begins the trickery of the greedy. Most van owners set a fixed price from Colombo to Jaffna. However, at the LTTE controlled border the van owners are expected to pay taxes on their generated income. The devious owners inform the gullible passengers that LTTE is taxing ‘them’ and how they have to pay additional money. Thus, instead of the owners paying, they obtain their share from the travellers. Despite the swindling, the greedy owners shamelessly transfer the blame on LTTE and its tax system while retaining their profit.

Why does 10 percent taxation on imported fruits from the South warrant disbelief amongst Tamils? After all, most areas of Eelam are abundant with fruits such as mangoes, bananas, pomegranates and guavas, just to mention a few. In a tropical climate where fruits are harvested year round, wouldn’t importing a particular fruit be considered special, thus moving that fruit from the category of ‘necessity’ to that of a ‘luxury’ item? For example, if one sought after a particular type of ‘Grapes’ from Italy wouldn’t they be charged extra for shipping and handling, and not to mention the import tax? So, why should it be any different in Eelam when a ‘luxury good’ in this case fruits that is imported, be taxed a mere 10 percent?

Many claim it’s preposterous to pay a 25 percent levy on cigarettes under the LTTE tax schedule. However, in the Western nations cigarettes are taxed with a heavy hand with the sole intention of discouraging the number of smokers. If this can be imposed and accepted in the Western nations, then where is the injustice in the LTTE administration implementing a similar principle?

Several Tamil residents in the Northern region feel victimized by the double taxation. Double taxation occurs when two or more tax jurisdictions overlap, such that the same item is subject to tax in each. Welcome to reality. Don’t we all not pay a duty at the customs for goods purchased when travelling from one country to another? Or if one was working in a country while residing in another, does that individual not have to abide by both laws? Then, why should it be any different under these circumstances? After all, taxation is merely a system used by governments to obtain money from people and organizations, in order to support itself and to provide public services, such as: protection, infrastructure, and schools are just a few from the long list of services provided. Is it not unfair, for the Tamils to expect LTTE to protect and provide, while they choose not to open their purse strings to pay for the services?

Creativity at its peak

A gentleman, a permanent resident of Jaffna, recounted with such certainty and confidence that when his brother and family visited him from aboard, at the LTTE checkpoint they were forced to pay 5,000 rupees as foreign travellers’ tax. However, this sum will come as a great surprise to many who have gone through the system, because the actual family tax for foreigners is ONLY 500 rupees. Without a doubt the gentleman figured an additional zero to the 500 rupees will not only buy him his five minutes of fame but also an audience to condemn the taxation policy. This is just one of the many creatively woven smear campaigns that are presently circulating the gossip mills of Jaffna, regarding the LTTE taxation.

Western money but Eastern mentality

Seemingly many Tamils from aboard, deem the dynamics of the finance to cease existence once they set foot into the LTTE controlled area. I say this from first hand experience, but also after listening to many similar unbelievable yet humours anecdotes.

Facts: The LTTE administration taxes a family travelling from aboard 500 rupees when entering their controlled area; while the Government of Sri Lankan extracts a tax of 1,000 rupees per individual when departing Sri Lanka.

Incident: A family from aboard arrived to re-visit their birth land. At the LTTE checkpoint they were requested to pay a mere sum of 500 rupees in tax.

The lady of the family, who was decked in more jewellery than a jewellery store mannequin, rudely questioned, “Why are we supposed to pay this money?”

LTTE officer humbly replied, “To protect your motherland and provide services to the public.”

The rude words that flew out her mouth were, “I am not a citizen of your Tamil Eelam. And you are not protecting any land of mine. So, why should we pay the 500 rupees?”

Astonishment and embarrassment were clearly evident on the face of the LTTE officer, while my jaw almost hit the ground. I could not help but wonder, if she had the nerve to tackle the Government of Sri Lanka custom officer with the same gumption, over the 1,000 rupees per head departing levy she was going to be charged; or if we, her present audience, were the only beneficiary of such great Oscar calibre performance? To my utter satisfaction, I later found out that particular family was denied entry into the LTTE controlled area and thus deprived of their golden opportunity to flaunt their newly acquired wealth and attitude to their family and friends.

Interpretation: In 2001, the Government of Sri Lanka’s defence budget consumed approximately 36 percent of government income and which according to unpublished reports are said to have remained the same for 2002 as well. In other words, for every 1,000 a Tamil paid in tax when departing from their Sri Lankan vacation, 360 rupees of that money went towards bombing and destroying the North and Northeastern regions. With no complains, many Tamils will hand over the money to have their backyards bombed but these same Tamils have a sudden clash with ethics and principles when the LTTE taxation policy requests a mere 500 rupees per family, to protect that same backyard.

Reality bites

Taxation has been a thorn in peoples’ sides for centuries. Nobody could have said it better than Sir Winston Churchill when he noted, “There is no such thing as a good tax.” However, law stipulates that we pay taxes, irrespective of our wishes. Like a bitter pill, most taxes in society are dexterously integrated within the displayed cost. However, the problem arises when the tax payment is in an unhidden format – such as Income Taxes. There’s no pain greater than that of, literally handing over ones hard-earned money to the Government. Until the LTTE administration implements a centralized system whereby many cannot witness or feel the effect of taxes, they are faced with an uphill ‘public relations’ battle.