Sri Lanka: Udaya Gammanpila says Environmental Levy does not burden public


Posted by on August 19, 2008  /  14 Comments

Responding to Rohan Samarajiva’s views on newly implemented Environmental levy in Lankadeepa last week, Central Environmental Authority Chairman Udaya Gammanpila calls it essential and the ‘first progressive tax’ in Sri Lanka. Assuring it does not burden public, he says any tax can be initially unpopular but the impact should be seen in long term. (Lankadeepa, August 19, 2008)

These are his points in brief:

1. If not for the Environmental levy, the government has to find money to address environmental issues by increasing either VAT or customs charges. That will raise prices in general. It is unfair. Why should villagers who have never seen a mobile phone contribute for its removal whenever they buy flour to make rotis? Instead we have introduced a tax only on pollutants. So only the culprits pay for remedial measures.

2. Mobile phone usage has drastically increased during the last few years. Now there are about 8 million mobile phones in Sri Lanka. (sic) The cost of a mobile phone was reduced from Rs. 75,000 in 1994 to Rs. 3,500. These have made the lifetime of a mobile phone shorter and more mobile phones are being released to the environment. (sic) Our intention is to build a recycling plant for e-waste. Such plants can be seen in India and Singapore.

3. Why we tax mobile usage? Because it is one commodity the prices have fallen during the last 15 years. In 1994 an incoming call was charged at Rs. 20 and outgoing at Rs. 30 per minute. Today incoming is free while outgoing is Rs. 4-5 per minute. How can one allege us insensitive to Cost of Living?

4. Before complaining about these taxes one should note their actual impact. 90% of Sri Lankan mobile subscribers are pre-paid. The average revenue per unit of a prepaid account is Rs. 360. Let us assume it to be Rs. 500. Two percent of that is Rs. 10 per month. That is all we ask to protect environment. Is this adequate even for a cup of tea?

5. Atmospheric pollution in Sri Lanka is too high. The tax on motor vehicles is meant to control this. Vehicles are taxed only if they pollute. If they run on electricity or water (sic) no levy is applicable. The levy is proportionate to the level of pollution. Vehicles such as buses, lorries and three-wheelers are exempted on Cost of Living considerations.

6. CFL bulbs solve one environmental problem, but their release to environment causes another. So we need to collect the used CFL batteries for recycling. A Denmark company has agreed to setup a recycling plant if we ensure enough input. We believe taxing 3% on non-CFL bulbs will make CFL bulbs more popular.

7. Tower tax is meant to encourage telecom operators to share towers. That has no effect on Cost of Living.

8. The money collected will be credited to a special environmental fund. Ministers of Finance and Environment have to annually report on this to the parliament. This ensures tax money will be used solely for environmental protection purposes.

(We open the discussion to our readers.)

14 Comments


  1. Donald Gaminitillake

    What about other electrical items? Radios, TV, DVD, CD, Computers, Irons, Electric pianos, Amps, etc etc. Farmers do use most of these products. Even Slums do have TV’s etc. Who is going to remove all these items. Why only mobile phones?

    CFL bulbs do have inorganic components. TAX the CFL why do we have to tax the normal blubs? Pollutions occur with inorganic matter. Organic matter will decompose into C,H,O.

    Tower TAX? Does SLT permits to give gateway in Apura for Mobile users? All mobile users will have to direct their traffic to single gate way via towers. If SLT permits gate ways in many locations some of the problems may get solved. I was told that one need 5 types of permits to erect a tower!!!!

    Mobile guys are scared to expose all this.

    Three wheers pollute more than Cars! Why cant the register of motor vehicle give statistic expose who owns motor cars in Lanka.
    A Govt registered petrol / Deisel /
    B Company registered petrol / Deisel
    C Private ownership petrol / Deisel

    Three wheelers 2 strokes , four Strokes

    Ownership
    Private
    Govt

    If private whether the owners are tax payers?

    Donald Gaminitillake
    I set the Standard

  2. The fact remains that Udaya Gammanpila, in spite of his bureaucrat’s cloak, is a hardcore politician. So to overlook the political implications of this move would be naïve.

    Wikipediac definition of ‘Environmental tax’: A policy that introduces taxes intended to promote ecologically sustainable activities via economic incentives. Such a policy can complement or avert the need for regulatory approaches. Often, such a policy intends to maintain overall tax revenue by proportionately reducing other taxes, e.g. on human labor and renewable resources, in which case it is known as the green tax shift towards ecological taxation.

    Will the proposed tax work as incentives for ecologically sustainable activities?

    Gammanpila readily agrees the only tax component that might change the behaviour of the ‘polluter’ is the one on towers. (I do not agree; but let us assume so for arguments sake) 2% tax on mobile usage, according to Gammanpila, is less than Rs. 10 for most users. Tax on vehicles will not make any motorist change to electric cars. Rs.3 increase in non-CFL bulbs is hardly adequate to make the use of CFL bulbs cheaper.

    So by saying the new tax has little impact on CoL Gammanpila indirectly agrees ate least three components are not ‘Environmental tax’ – which by definition is meant to make an impact.

    There are also questions whether it is the ‘polluter’ who is taxed?

    1. In case of motor tax, bigger polluters like buses and lorries go tax-free while ‘hal messas’ are taxed.

    2. Same in case of electronic goods. Mobiles are not the only items contribute to e-waste. TVs, radios, PCs, air conditioners, washing machines, refrigerators, car radio and air conditioners are bigger culprits. But none of them are taxed.

    3. CFL bulbs are the pollutants, but tax is on non-CFL bulbs. (Now what logic is that?)

    4. A telecom tower is not a pollutant; it affects aesthetics, but that can be addressed by use of fake towers that appear as trees etc.

    So it is clear Gammanpila only plays the role of ‘tax collector’ by taxing easy targets – that draws least criticism. The adjective ‘Environmental’ is only to fool the gullible.

    We also understand how politics work in Sri Lanka.

    Any political party needs money and supporters – mostly the three-wheeler types with least resources. Money can come from new investors. Supporters can be retained only if they are given jobs. Setting up factories is god given answer to both. Now we know why Gammanpila is so eager to setup recycling plants. Period.

    I have addressed some of the specific points of Gammanpila already in following posts, so will not touch them here.

    http://lirneasia.net/2008/08/sri-lanka-taxing-poor-to-clear-the-e-waste-of-rich
    http://lirneasia.net/2008/08/sri-lanka-road-to-%e2%80%98dharma-rajya%e2%80%99-does-not-look-toll-free
    http://lirneasia.net/2008/04/is-mobile-phone-a-polluter

  3. The talk about electric cars is amusing. If electricity is produced from non GHG producing means it may make sense to encourage the use of electricity for transportation. But if the electricity that the car is using comes from a diesel fuelled plant? What’s the benefit? The only thing more amusing is the exemption of water fuelled cars.

  4. On cars running ‘on water’:

    Water (H2O) and Carbon Dioxide (CO2)are the *end products* of a chemical reaction of burning fuel and releasing energy.

    The (unbalanced) equation is:

    CnHm + O2 = CO2 + H2O + energy

    (Where, CnHm is the fuel)

    H2O is not a fuel. It does not have any energy to release. (if not in a nuclear reaction) So strictly speaking no car can run on using ‘water’ as fuel. (Unless it is powered by a nuclear reactor like Marty McFly’s car in ‘Back to Future’ series)

    Of course, it is a child’s play making cars running on Hydrogen – released from water through electrolysis. Any Grade 9 student should know this.

    However, the amount of energy required for electrolysis more than the amount of energy produced by the so produced Hydrogen!

    So, if there are such cars they pollute the environment more!

    If I take an analogy saying we can run cars by water is equivalent to saying world food crisis can be solved by making people to eat their own excrement!

    So Gammanpila will tax those who eat rice, bread, vegetables etc., and spare those who consume excrement.

  5. Same in case of electronic goods. Mobiles are not the only items contribute to e-waste. TVs, radios, PCs, air conditioners, washing machines, refrigerators, car radio and air conditioners are bigger culprits. But none of them are taxed………..

    Thanks Chanuka and Donald for reminding me of non-taxed item list. I will not disappoint you two. I will impose taxes on the stuff in the two lists and will tell the public that u two asked for it.

  6. And why 2% of the bill if it is the unit that is the pollutant. Shouldnt it be a flat amount distributed over the average life time of a mobile phone?
    And what is the policy/strategy with regards to collecting the old units? Its is so easy to impose a tax but the units end up in the same old common dumpyard due to the lack of after thought.

  7. Reproduced from ‘The Island’ today:

    Monks challenge new taxes in Court
    by Chitra Weerarathne

    Two leading Buddhist Monks have filed a fundamental rights application in the Supreme Court against three new taxes gazetted recently.

    The Ven. Thiniyawala Palitha Thera and the Ven. Maduluwawe Sobitha Thera are challenging the new taxes on motor vehicles, on the use of bulbs exceeding 40 watts and the cellular phones.

    The tax on the use of bulbs with excess wattage is Rs. 3 per bulbs except the compact fluorescent bulbs.

    A new tax of two per cent on the calculated environment conservation levy is to be imposed on the use of mobile phones.

    The petitioners said that in keeping with the current cost of living, the people were unable to bear this burden and the Court should quash this regulation imposed by the finance ministry.

    The first respondent is Dr. P. B. Jayasundara. Among other respondents are Finance Minister President Mahinda Rajapaksa, the Central Environment Authority, Environment and Natural Resources Minister Patali Champika Ranawaka and the Attorney General.

    http://www.island.lk/2008/08/22/news20.html

  8. Niroshani makes an excellent point about aligning the tax to the behavior we’re trying the modify or the externality we’re trying to capture. Good reading for anyone interested is Chelliah, R.J., et al. (2007). Ecotaxes on polluting inputs and outputs (New Delhi: Academic Foundation).

    This book is the result of a research and consultation based process for developing effective eco taxes that reflect the Rio Declaration’s and Agenda 21’s endorsement of the polluter pays and precautionary principles. This is how things should be done (though I personally think 5 years is way too long).

    I am sure economists and people like Niroshani will assist Ven Sobitha thero in overturning this unsound and dishonest law and resultant levies.

  9. Nandasiri Wanninayaka

    I am not sure if this interesting quote from Late Ronald Reagan will suit here. Still it will explain the situation at least partly regarding constant taxing (and waste.)

    “Government is like a baby: An alimentary canal with a big appetite at one end and no sense of responsibility at the other.”

    – Ronald Reagan

  10. The Nation (http://www.nation.lk/2008/08/31/busi3.htm) has a story on the tax.

    Good story but she missed a key point that I made: if the tax is designed according to the polluter pays principle, it should be linked to the mobile handset as a fixed amount, and not as a variable levy on usage. Gammanpila claims that pollution is caused by handsets, so that’s what should be subject to the tax, not usage, which reduces pollution by reducing the need for travel.

  11. According to Champika Ranawaka, Minister of Environment from the next year onwards the ministry is run by the money earned from Environmental tax. (http://www.divaina.com/2008/09/01/news19.html)

    Doesn’t it breach the ‘polluter pays’ principle?

    Environment levy is aimed only at three groups:

    1. Mobile users (not necessarily owners)
    2. Vehicle owners
    3. non-CFL bulb users

    Should these three groups be taxed to address all the environmental issues? Are these the inly polluters in the country?

  12. Like Ranawaka, the Ministry of Women’s Affairs will not need money from government to run the ministry. We are in the process of making prostitution legal and issue an invoice before their services are obtained by the customer and a proper bill with a new tax called “pleasure of flesh” tax and that tax goes directly to the ministry. Prostitutes will be given credit card reading machines too. For other customers who pay in cash the pros will be given a palmtop and a mini printer.

    Another levy can be taken for rape convicts as well. The convicts will not be imposed jail terms but heavy fines. we think that these two new income generating models are enough to run our ministry and we will even think of building comfortable “joints” to brothels and rape activities to take place.

  13. It’s interesting to see Mr Wimal Weerawansa picking up the point about the bad logic behind taxing environment-friendly mobile use: http://blog.vasanaw.com/?p=12. Thanks to Vasana for picking it up. There is at least one point we agree with Mr Weerawansa on. He should tell this to his boss.

  14. Does Anybody know the effect of Mobile Phone usage on the environment?
    Where does Mobile phones fit in if the Environment Polluters are ranked?
    Does the Mobile Phone the Minister is using, cause more environment damage than the Luxury Jeep the Minister is Using?
    What guarantee can the minister give the public the money earned from this tax will be used only for environmental issues?
    If so what steps would the Minister take to help the environment using this tax?