The Island Editorial

Another budget

12 November 2016

 

The government is hailing its own budget as a very progressive one and the Joint Opposition has dismissed it as yet another burden on the masses. One should not be as uncharitable as those who are still smarting from last year’s electoral defeats in describing the budget. But, one may not want to risk one’s credibility by calling it progressive either.

Those who backed this government, expecting economic relief, are in the same predicament as Hillary backers in the US. They are disappointed and furious though they have not taken to the streets. In trying to ameliorate their suffering the government seems to have been influenced by the Bandula Gunawardena Theory— ‘a person can survive on a monthly income of Rs. 2,500’. For, the reduction in the prices of comestible such as sprats, dhal and potatoes will help a family of three save only ten percent of the aforesaid amount a month.

The huge increase in fines for traffic offences, in our book is the ‘most unkindest cut of all’. Habitual traffic offenders, no doubt, deserve deterrent punishment. But, bad road conditions drive motorists to commit minor traffic offences in most cases. The irony is that the government which is all out to squeeze motorists dry does precious little by way of road development. Hereafter, traffic fines will yield a much higher revenue for the state coffers than VAT.

A serious discussion on tax revisions at this point in time may be an exercise in futility as one is not sure how much of the original text of Budget 2017 will remain intact within the next few months. The government’s last budget was a textbook example of a ‘Christmas tree’ with more amendments than the original proposals.

Vital sectors such as education and health have suffered severe fund cuts while allocations for the President and the Prime Minister have increased substantially. Some people seem to have all the luck! The allocation of funds for the Ministry of Education, which saw a four-fold increase in the previous year’s Appropriation Bill, has drastically come down from Rs. 185.9 billion to Rs 76.9 billion for the next year. The Ministry of Higher Education and Highways has got only Rs. 163.4 billion for 2017 as opposed to Rs. 171.4 billion for this year. The allocation for the Ministry of Health, Nutrition and Indigenous Medicine has also decreased to Rs 160.9 billion for 2017 from Rs. 174 billion for the current year. The Defence Ministry has got only Rs. 284 billion for the next year as compared to Rs. 306 billion for 2016.

Instead of fulfilling its promise to allocate six percent of the GDP for education, the government has offered loans (amounting to Rs. 800,000 each) to students who opt for private university education. Since the state-run universities cannot cater to all students who qualify for higher education the need for helping the unlucky ones who have to pay for their education for no fault of theirs cannot be overemphasised. But, more funds must be allocated for the cash-strapped national university system so that it can increase enrolments.

The government has, with one hand, taken more than what it has given the people with the other. Man does not live by potatoes alone. A person who receives treatment at a private health institution will have to consume tons of Yahapalana potatoes or sprats at reduced prices for years to come to recover the huge loss due to VAT on his or her hospital bill!

The government insists that what it has just presented is a development oriented budget. True, there are some salutary features such as the fund allocations for developing infrastructure, agriculture and renewable energy. The proposed tax concessions for FDI above USD 100 mn can also be expected to incentivise potential investors. But, all in all, it is doubtful whether such measures alone will give a turbo boost to the government’s development programmes in the doldrums.

Prices of some categories of vehicles are expected to come down owing to a tax reduction. But, the vast majority of ordinary people dependent on Shanks’ pony haven’t got any tangible relief. A pithy slogan the then UNP-led Opposition used against the Rajapaksa government was ‘Lamborghini for patricians in power and badagini (pangs of hunger) for plebeians’. It is still valid though the self-proclaimed Yahapalana messiahs have been in power for nearly two years.

As for budgets, people are the best judges. Their judgment will be known when the much-delayed local government polls are held.