Colombo, Economy

Petrol Pricing

Minister Bandula Gunawardene appeared on V and implicitly commenting on the Supreme Court decision perhaps made a point that all taxes are made by Parliament. Not quite since the Minister of fiancé can gazette orders under the Revenue Protection Act if my memory is right. True they have to be tabled in Parliament thereafter. The question at issue is not a change in taxes.

The Supreme Court as far as I am aware has not changed the taxes on petrol. What it has done after consulting the Secretary of the Ministry of Finance who submitted pricing formulas decided to fix the price of petrol. It has taken into account the current taxes and levies on petrol. What it has done is to prevent profiteering by the CPC perhaps to cover up its losses on the hedging contracts and the defaulting in payments by the government departments like the CEB, the Railway and the Armed Forces. Should the public be called upon to pay by way of higher prices for the negligence, corruption and incompetence of the government? I think not. Can the Supreme Court intervene in pricing matters? Not unless they are fixed by monopolies or cartels. Doesn’t the Consumer Affairs Authority have the power to intervene where there is monopoly pricing?

Fair prices must be enforced where there is market power by one supplier. This is part of Fair Pricing and is accepted and practiced in every free market economy. Regulation of monopolies and cartels is the duty of the regulatory authority. Where the regulatory authority fails in its duty the Court certainly can and should intervene to prevent undue exploitation by any agency whether owned by the government or the private sector. Hasn’t the Minister Bandula intervened in fixing prices of gas, milk foods etc to see that there is no undue profiteering by those exercising monopoly power either singly or as a cartel. Being a small economy closed to some extent we consumers can be easily exploited. If the Government wants to preserve its revenue from taxes on petrol it can always raise such taxes rather than engaging in veiled criticism of the Supreme Court which in this case is certainly acting in the public interest.

Please Minister Bandula Gunawardene don’t mix up pricing in organizations with market power from taxing powers of the Government.