A people's Budget
A new era has dawned in Sri
Lanka - the era of the common man. This fact was reflected through the
interim budget presented to Parliament on Thursday by Finance Minister
Ravi Karunanayake. It was a budget that went a long way towards
fulfilling the aspirations of ordinary people - not only those who voted
for President Maithripala Sirisena, but all Sri Lankans who wish to see
equality and progress in their Motherland.
It was in stark contrast to the budgets previously presented by the
then President and Finance Minister Mahinda Rajapaksa. Those budgets
mostly pandered to the rich at the expense of the poor. Duty and tax
exemptions were granted to casino moguls while tax burdens were heaped
on the ordinary masses. Corruption was rampant, as evidenced by the
large number of complaints made to the police and Bribery authorities in
this regard. The public had to make up for the losses suffered due to
wastage and corruption, through indirect taxes on essentials and other
goods. Even fuel prices were reduced only marginally, whereas prices had
plummeted drastically in the world market. The Cost of Living was
On the other hand, President Maithripala Sirisena's Maithri Manifesto
promised to bring down the Cost of Living, as one of the immediate
priorities for the new Government. Well before the mini budget
presentation, it reduced fuel and kerosene prices by a considerable
margin. This has had a cascading effect, with bus, three wheeler and
school van fares due to come down from today. Goods transport has become
cheaper, which should translate to cheaper foodstuff and other goods in
the market. Fisherfolk are hopeful that they could pass on the benefit
of cheaper fuel to their consumers soon.
As promised, the Government has substantially reduced the prices of
13 items including sugar, wheat flour, green gram, sprats, canned fish,
milk powder and corriander by reducing customs duties and taxes on
imported items. This is a commendable move that will resonate with a
wide section of the society crushed by the COL burden. Kerosene was
reduced even further, a far cry from the stance of the previous
government which said that kerosene is no longer being used by
households. LP Gas, which has replaced kerosene in many urban
households, is also more affordable now following a Rs.300 price
Many people are not earning enough to make ends meet, even with a
reduced COL in the offing. In this context, the Rs.10,000 salary hike to
be given to Government servants is timely and we hope private sector
companies will follow suit. Pensioners too have not been forgotten, with
a Rs.1,000 rise announced in the budget. The poorest of the poor
including Samurdhi beneficiaries will also benefit from the Budget, as
will university students getting the Mahapola bursary, which was
increased to Rs.5,000.
Agriculture is the heartbeat of the nation. President Maithripala who
is closely knit to the farming community, knows this all too well and
the maiden budget has given them due recognition. Hence the enhanced
farmgate prices for rice, potatoes and fresh milk. While this may
marginally increase their prices in the retail market, consumers are
aware of the need to uplift the living standard of the farmer. Fifty
percent of the agri loan amounts will be waived off and modern
agricultural equipment will be provided at concessionary rates, which
should boost the sector.
Critics of the Government have questioned as to how the Government
could afford to fund these concessions. One simple answer is that a lot
of funds will be made available by eliminating waste and corruption. For
example, a staggering Rs.95,930 million was allocated for the office of
the President for 2015 and the new Government has pruned it down
drastically, to just Rs. 2,560 million. Stopping the Deyata Kirula
exhibition alone has saved Rs.25 billion. Sri Lankan and Mihin airline
will be merged to reduce losses.
Another Rs. 2.5 billion has been saved by reducing the number of
ministries. A prohibition was also imposed on Ministries and state
institutions from publishing promotional newspaper advertisements. Since
eliminating corruption is a cornerstone of the new Government, it may be
possible to grant even more relief in the future. After all, financial
discipline and accountability are vital for good governance, an avowed
principle of the new Government.
Another answer to the funding question is that the Budget seeks to
tax rich companies and individuals, especially those who have not paid
one red cent in taxes so far. Casinos, satellite TV providers and non
tax-paying private sports channels will have to pay a Rs. 1,000 million
one-off payment. Mobile and telecom companies too will have to make a Rs.
250 million one-off payment.
Any company of which the profit exceeds Rs. 2,000 million will have
to pay taxes amounting to 25 percent off its profit. A mansion tax was
also proposed, where owners of luxury mansions worth over Rs. 100
million will have to pay a separate annual tax. Such direct taxes
targeted at the rich are more appropriate than indirect taxes such as
VAT which affect everyone.
The Budget has also slashed duties on cars with an engine capacity of
one litre or less. This will make smaller cars more affordable for
families to buy their first car. The Government should explore the
possibility of slashing duties on motorcycles, scooters and three
wheelers, considered the poor man's vehicles.
There seems to be some confusion over the new taxes on hybrid
vehicles - the authorities should clear the air soon, but we believe
these duties should be reduced further to save on fuel and foreign
The Budget has not forgotten the education and healthcare sectors,
whose development is vital for an emerging nation like ours. Budgetary
allocations for both these vital sectors will be increased, with
education gradually receiving up to six percent of GDP, a persistent
demand by educationists and academics.
From a Rs.20,000 allowance for expectant mothers to a fund for kidney
patients, the healthcare sector is likely to receive a shot in the arm.
The Government aims to develop every school to the level of leading
schools in Colombo and Kandy which will end the rat race for year one
admissions. Dhamma school and preschool teachers will also benefit from
the new budgetary proposals.
The mini Budget was not meant to fulfill the aspirations of everyone
at this juncture. As stated, it is only a temporary set of relief
measures and the people can expect even better tidings from the next
full budget in November this year.
However, it will go down in history as one of the most
people-friendly, progressive budgets ever presented in Parliament in
recent times. It delivered most, if not all, of the measures that were
eagerly awaited by the people.
The masses must take cognizance of the fact that the Government must
also concentrate on aspects such as infrastructure, economic and social
development, peace and reconciliation while striving to provide relief
from the COL. This will no doubt be highlighted on the 67th Independence
Day commemoration on February 4.
In retrospect, the people's victory on January 8, 2015 could be
termed as a harbinger of freedom after nearly a decade of oppressive and
tyrannical rule. With the Budget, the people have just begun tasting the
fruits of that freedom.