AFTER many days of suspense and speculation, the Budget has been presented. The end of the beginning has been reached, but what does it mean for the private sector and the common man?
From the reaction of the average person, the expected salary hike has not reached expectation with only a non-pensionable 5% monthly allowance for public servants. Yet, as was pointed out, creating the environment for more private sector investment – both locally and internationally – would give a boost to the entire economy rather than increasing recurrent expenditure, which would not spur long term growth.
Balancing out these two extremes was a challenge that the Budget had to deal with and the sense of disappointment was relaxed with the proposal to establish a pension scheme for the private sector employees with 2% contribution from the employer and employee. The private sector reaction was in many instances positive about the Budget measures to streamline taxes and give incentives to key sectors, including motor, banking, aviation and tourism.
For many of the business community, the Budget was the key policy-making vehicle that would decide crucial points relating to how the Government would function during the next financial year. The reduction of VAT and local call charges and removal of import tax on medical supplies as well as a host of policies can spur individual sectors.
The bankers were happy with the reduction on taxes that were as high as 60%, which is now reduced to normal corporate tax, which will give them a chance to expand and covert Sri Lanka to a financial hub. Reduction of the debit tax would also give the banks more clients by encouraging people to use accounts for a larger number of transactions. Motor, tourism and aviation were among the other sectors that were encouraged by the Budget. Despite liquor and casino taxes increasing, the tourism industry was upbeat – pointing out that the effects would be minimal since the amounts were not large.
Focusing on the future and limiting handouts for the present seems sound in theory. However, the economic benefits that the public and private sectors receive must have a trickledown effect so that the average person benefits from these policies. The target of doubling per capita income in six years is a laudable if highly ambitious target, but while reaching for the stars we must remember all the people who need assistance now.
With these two extremes in mind, the people must move forward with a positive spirit to ensure that the positive euphoria after three decades of conflict will be maximised on. Reconciliation and rebuilding measures must also be focused on and no economic development will happen if good governance, accountability and transparency are not focused on. Sri Lanka must not forget to look beyond just money and focus on equitable and sustainable growth for the benefit of all.