The government is in no position to provide relief to Sri Lankans in the November 6 budget due to problems which are multi-dimensional, according to analysts. Senior lecturer in economics at the University of Colombo Dr. Sirimal Abeyratne said the government has to continue with the war and has earmarked Rs.177 billion in the coming year on military expenditure.
The government must also continue to deal with infrastructure problems and the additional development expenditure in the East and North. "Given these big problems, the government is in a very difficult position to provide any tax relief or wage increases," Dr. Abeyratne said. "There will be some adjustments in taxes but there might not be a major tax revision. Many areas are already heavily taxed. Even if the government is going to increase salaries at this particular juncture, with high inflation, it's going to be a useless exercise."
A stockmarket analyst said budgets have become more like policy statements or glorified proposals saying the government has the potential to do a lot in the budget but does not need it to implement certain policies and may prefer to do so outside the scope of the budget to minimize attention. Over the past few months, taxes were increased on alcohol and tobacco without much fanfare.
He said all sectors will be looking for concessions and allowances but the government has a tough balancing act because on expenditure, things are inflexible. When it comes to recurrent expenditure, welfare payments and interest on government debt, they cannot be changed around. "Given the inflexibility on the expenditure side, do you sacrifice capital expenditure which could have long term repercussions or expand the tax base?" He also said the Appropriation Bill numbers are not immediately reconcilable with Central Bank (CB) figures and what is presented at the budget. The classification varies and it is not easy to compare and contrast. |
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