Budget: Racing cars derail milk prices
View(s):One of the first things that drew the people’s attention in the budget was the racing car proposal where such imports would be tax exempted.
“I must get a Ferrari,” said one respondent in the snap budget poll jointly undertaken by the Business Times and Colombo-based Research Consultancy Bureau (RCB).
“We’ll have to carry the tin of milk powder on the roof of the racing car,” joked another Colombo-based office assistant whose roots are from a downtrodden village in Moneragala.
Jokes apart the pun on the racing car was meant to reflect the fact that the budget, according to a cross-section of people polled, didn’t meet all their aspirations. Middle-class low income wage earners in particular said there was no relief; rather prices would go up particularly with the hike in imported milk powder – as local production needs to be able to meet the demand. Today’s budgets are often a lot of rhetoric. The real thing – baggage from the past – is the gazette notifications of price increases just before and after budgets. It’s a process started when N.M Perera was finance minister during 1970-1977 where he introduced the price hikes via the (midnight) gazette, winning him the dubious name tag ‘NO MONEY (NM)’ Perera. That practice has continued over the years with more increasing frequency of price hikes outside the budget and some sops in the budget (quickly taken away with a tax hike thereafter).
Over the years while corporates and businesses eagerly await the budget and decipher it as if looking for something in a haystack, wage earners – especially middle and lower income people in cities – have viewed budgets with disappointment. Office assistants (formerly peons), most of who come from the outstations, were hoping for some relief which they say is not there.
On the other hand, the impeachment of the chief justice and its debate has also taken the shine off the budget, which in a day or two will be a forgotten event.
The budget also has its political twists. Anti-government supporters will be unhappy even if there are good proposals while ruling party supporters will hail it even without knowing the contents and (any) ramifications.
Independent thinkers – a few around anyway – considered this year’s budget with an analytical mind and gave pluses and minuses, virtually in equal proportions.
One of the concerns is that the budget is full of subsidies which would require a lot of revenue, an area that has always been an issue in recent years with the government falling short of targets or forced to increase taxes.
The private sector in general welcomed the budget and its sops to sectors including industry, finance and the stock market.
Government focus has been in providing a set of incentives for the development of various sectors in the hope that this would create a trickle-down effect, eventually benefitting all sections of the people and communities.
If that is the case, why does the average person show lethargy, disinterest or condemn the budget as a “Oh there’s nothing in it for me” type of comment? Is it just budget and price-hike fatigue that has taken over rational comments? Or simply that people don’t believe their leaders anymore and the much-hyped trickle-down effect doesn’t happen?
Trade unions, often on a confrontation course with the government, say this is an inflation-trigger budget and continues (as in the past) to affect private sector employees numbering four million against 1.2 million state employees who won a Rs 1,500 wage hike.
One union leader said this was a hackneyed budget while another said there were no innovative or creative proposals.
Another emerging feature in the Rajapaksa-presented budgets, which happened last year too, was that the entire presentation is made in one go, with current developments, changes and new taxes announced at the same time.
Earlier it was demarcated into two segments – preamble on development and work done so far … followed by the tax proposals and impact, the budget deficit and how the deficit would be bridged – free money (grants), commercial borrowings and non-commercial borrowings.
While the authorities are entitled to present the budget any way they want and not follow past practices, the details however must be transparent and clear to the public at large. The way it is done now begs clarity for detailed proposals (that were announced in previous instances) but now only available in book form or on the Internet. How many ordinary people would have access to this with their only source being listening to the President on TV?
This is why the Supreme Court’s ruling (see on this page) on the Appropriation Bill assumes importance. The judges said that the doctrine of public trust requires accountability to be assured at all times. It also said all powers are exercised under this ‘trust’.
In this context the public has a right to know how the various proposals are being financed – handouts are welcome but where’s the money? It was also clear that the budget is targeted to retaining the ruling party’s vote base.
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