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| Sunday, 23 November 2003 |
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The 2004 Budget : mixed reactions The 2004 budget was presented in Parliament on November after a week's delay and much uncertainty, has brought mixed reactions from a cross section of the common people, many of who are of the opinion that, it hasn't done much to bring down the cost of living. Some were critical of the public sector salary increase and other benefits accorded to government servants, while others welcomed the increase in the fertiliser subsidy, the voluntary retirement scheme for the public sector and called it a good budget. by Elmo Leonard Sri Lanka is not a welfare state and its citizens, especially in the immensely over-populated government sector, have no right to demand salary increases, retired teacher, Anil Wettasinghe, living in Kurunegala said. Salary increases could be expected if the citizens of a country boost production and when there is economic growth. Increased production leads to lower prices and a healthier economy. Salary increases spells lesser money for development; development leads to economic activity. The people of any nation get the government they deserve and there is no use blaming any government in office for budgets presented. Governments are elected by its people. If the people show maturity, the governments they elect would be more responsible and the budgets they present would be of more use to themselves and for posterity. Salary increases have a vicious cycle on the economy; it increases inflation and sends up the cost of living, Wettasinghe said. Tax consultant M. Thiyagaraja agreed that salary increases in theory leads to inflation. But, it depends on how that deficit is bridged. If it is bridged with funds from grants and aid, there would be no inflation. Wettasighe says, when aid and grants are utilised, Sri Lankans go deeper into beggary. A paddy and vegetable farmer from Jaffna, Saminathan Alfred was all praise for the increase in the fertiliser subsidy. If the peace process is disturbed, the fruits of the budget would not be realised, he said. Veilupillai, Mathi, a young worker in Trincomalee, said budget or no budget, peace is imperative to the people in Trincomalee. Before the peace process, he had no work and was weighed down by different restrictions on movement, even fishing. "Cinema hall" manager, from Ratnapura, D. G. Chandrasena said that tapping toddy from the Kithul palm should be exempt from licence and be tax free. This would help counter the menace of the illicit brew. It would also increase cultivation of Kithul trees, now too few to even feed the elephant population of the country. Kithul toddy is known for its health-giving properties. Decreasing the VAT rate on essential items would not be effective and prices would not come down. If the people are to benefit from VAT reductions, the prices of reduced items should be fixed, Chandrasena said. Successive governments give pay rises to government servants to appease them for the wrong that governments do and to ensure that the government machinery goes on without interruptions without any strikes, Chandrasena said. The budget also spoke of granting housing loans at reduced interest rates to government servants. Private sector employees are also citizens of this country and are often engaged in more gainful work, to the economy than public servants. When those in the private sector are employed for 10 to 15 years they should be given loans to build houses on equal terms. The budget allocates money for developing houses in the estate sector, while most of the estates are privatised. It is the business of the private sector to build houses for the estate sector. Also housing loans should be accessible to all citizens. The rupee should be fixed if the cost of living is to be stabilised, according to the cinema manager. When prices of goods go up, it is passed on to the consumer; when prices come down, the prices remain static. Tax consultant Thiyagaraja said that the Economic Development Levy as in the budget would also have some medium-scale companies caught up with it. The Tax on Partnership also discourages the formation of partnerships in business. The increase in Individual Personal Tax from Rs. 240,000 to Rs 300,000 would enable the average workers to be exempt from tax. VAT should be a round 15 percent, according to Thiyagaraja. The taking away of tax holidays and tax incentives would not encourage investors. Housewife, Padmini Ponnamperuma, from Wellampitiya is uncertain about the benefit of the removal of the VAT tax on milk powder, medicine and the like. "In actual practice, it will have to be seen whether these prices would come down," she said. For the housewife, the budget showed no gain; the prices of consumer essentials, like gas, fish, rice and vegetables, have gone up with the emergence of the current political crisis, Ponnamperuma said. Housewife, Geetha Kalyani Vithanage from Galle thought that much was expected from the UNP government since it came into office two years ago. She too was not sure whether prices of essentials would decrease. The tax on mobile telephones should not have been made it is not a luxury item. The Finance Minister should search and tax the many sectors where large profits are being made. For instance, some exports of fisheries products could be taxed. An example being that `Kelawella' fish sells at the equivalent of Rs. 2,500 in Japan while in Sri Lanka the fisherman gets Rs. 175 - Rs. 200 per kilogram of this type of fish, even when purchased for export. Luxury cars and luxury items should entail taxes. Vithanage agreed with the Finance Minister that the economy had growth following a negative growth rate two years ago. Horace Munasinghe (78) retired from the mercantile service and living with his wife at Kadawata, had nothing to be happy about; he draws no pension. His wife, Sirima Daisy Mildred Jayasinghe, a retired teacher was happy with the 10 percent increase in pension she would receive, which would be substantial. Jayasinghe, lamented that other teachers who retired before 1996 draw miniature pensions. The retired principal of a school in Ratnapura, a BSc graduate and trained teacher receives Rs. 5,500 per month; the increase she would receive would be little, Jayasinghe said. Poor people would get little benefit from the budget, she opined; even the Janasaviya scheme is not in force. A consultant from Galle, Siri Dambulla thought that government servants should have got an increase of over Rs. 2000. The rupee should be strengthened against the dollar. Rajamani Anthony said that the budget should have recommended a pay hike also to the private sector. He said that the those employed in the small industry sector and the self-employed had nothing to gain from the budget. The plantation workers did not stand to benefit from the budget. The budget was a good one, but Anthony doubted the budget would be implemented with the current crisis in the country. Manager of vegetarian hotel in 2nd Cross Street Pettah, N. Kanagaraj said that consequent to the budget, all hotels would have to pay 15 percent VAT and the small hotel would have to pass it down to the consumer. Five star hotels sell cola at Rs. 140 per bottle and small hotels for Rs. 12. Small hotels should have to pay a much reduced VAT. Those who don't pay tax for three years should get jail sentences according to the budget. But, Kanagaraja thinks that those who do not pay tax for one year should be jailed; "three years is a long drawn affair leaving many loopholes." Some "big" people do not pay any tax, at all, he said. BUDGET AT A GLANCE * Ten-percent salary increase for the public sector or Rs 1,250 per month, whichever is higher, from January 2004. * Ten-percent increase in pensions. * Voluntary retirement scheme for the public sector. * VAT to come under single unified band of 15 percent. * Tax-free allowance for personal income tax increased to Rs 300,000. * Rs 300 levy for mobile phone subscribers. * Twenty-percent surcharge on duty reduced to 10 percent. * Excise duty on beer with alcohol strength of less than 5 percent increased by Rs 5 per bottle and Rs 10 exceeding 5 percent alcohol. * Tax on a tapping toddy from Kithul palm tree reduced to Rs 50 per year, from Rs 250. * New housing loan scheme for public sector employees. * Increase in fertiliser subsidiary. * Agricultural loan relief for farmers. * Maximum age of motor cars that can be imported without a licence raised to three-and-a-half years. |
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