Wednesday, May 07, 2008

Where Your Taxes Go

The Daily Mirror has this report today,

Making a stunning disclosure yesterday House Leader and Senior Minister Nimal Siripala de Silva told Parliament that six Nation Building Ministers were using 43 vehicles, incurring a staggering monthly fuel bill of Rs. 752,500. [..]

Minister de Silva said each minister was paid a monthly fuel allowance of Rs. 17,500 for each vehicle and that there was no move to purchase new vehicles for these ministers. [link]

I keep telling my friends for the what we have in Sri Lanka, is not that great debate between American Liberals and American Conservatives about Big Government vs. Small Government, we are talking about is absolutely freakin huge government vs. more-than-big government. We are not even at a stage where we can even begin to have that debate of big vs small government.

Sri Lanka not only have the world's largest cabinet of more than 100 Ministers, but possibly the world's largest (per capita) bureaucracy with 1 bureaucrat per 20 persons. Most of our tax money (56 cents of every tax rupee) goes to paying salaries for these bureaucrats and even more of it for maintaining this massive bureaucracy, in fact in his last budget speech, the President proudly declared (pdf link) that all government revenue (your taxes included) have been used for recurrent expenditure (salaries, pensions, subsidies, etc.) and all the capital expenditure (your roads, hospitals, etc.) was financed through debt.

So if you are one of those people who feel mushy about the fact your taxes are funding infrastructure and suchlike, think again. Also, if you are on of those people who think that the "tax payer" is rich people, think again too. Tax payer, thanks to the VAT, is everybody. So forget about ducking income tax guys, if you buy soap, you pay taxes. In fact if you just hold money, even without buying anything, you'd still be hit by the inflation tax, which will squander nearly 30% of the value of your money. Inflation is a result of having a massive government, with government printing money to keep itself afloat.

So yeah, whether you like it or not, we need to cut down the size of government. We can certainly start by cutting down the number of vehicles the 6 nation building ministers use, then perhaps cutting down the number of nation building ministers (seriously, what exactly does a 'nation building' minister do ?), then the size of the cabinet, and then cutting down on the number and scale of state institutions (that's CEBs, Railways, SLTB, Mihin Lanka). In short, Privatize and liberalize, and maybe then, we can have that big government vs. small government debate.

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