Walk the talk

BUDGET crosswinds are already blowing. Now that the proposals are out, the time has come for implementation. Never was this more vehemently emphasised than by the speeches given by the Treasury Secretary, who has made it a pivotal point of comment in the post-Budget seminars that are organised by a plethora of institutions.

If the Budget was all that the private sector expected, then it is time for them to meet up to those expectations, he insisted, at a seminar jointly organised by the Colombo University MBA Alumni Association and Daily FT. Taking these words to heart, a range of top business officials have called for more investment and urged banks to use the tax cuts to give long term loans to the private sector. They have also spoken positively of the benefits provided in lower taxes, incentives for research and development as well as the overall optimism generated by the Budget.

On the negative side, opposition political parties are far from satisfied. Predictably, they are critical of the lack of benefits for the common man; this complaint mainly hinges on the absent salary increase of Rs. 2,500. However, pragmatists point out that if the recurrent expenditure is expanded by around Rs. 50 billion, it  would leave little for development purposes. So clearly the Government has chosen to focus on the future rather than the present.

Yet, it is not without sparks. Over 10,000 graduates are to be recruited for a range of sectors including engineering, planning and agriculture, while 1,500 others will be taken as management trainees to State banks and financial institutions. This will have a significant impact on public expenditure as well as reduced the number of unemployed graduates.

In addition the Government has introduced a contributory pension scheme for the ageing population. Sri Lanka has one of the fast ageing populations in the world and as such planning in advance to deal with the health, housing, employment and support challenges that this will bring in two decades is noteworthy.

When it comes to taxes, the people are prey to a balance game. What is given with one hand is often taken with the other and in this instance too there seems to be a fate of mixed fortunes awaiting the common man. On the one hand, the reduction of local call charges, streamlining income tax, reduction in vehicle taxes and a 5% monthly allowance for public servants as well as a Rs. 600 cost of living allowance are relief measures. However, the tax on essential items will have a cascading effect that will increase the prices of potatoes, onions and similar goods.

With the banks given provisions to give long term loans, more average people will have the chance to become entrepreneurs and link into the overall economy. This could provide a better standard of life without draining the public coffers and increase production at the same time.

Top economists see the Budget as the first step in a long journey of economic regeneration. Even though the tax changes are welcome it was pointed out that the key problems of collection, returns and expanding the tax net still need stronger measures. Promoting trade and increasing labour skills is extremely important, but needs more focus from the Government. It is clear a start has been made by the Budget – now the time has come for all stakeholders to walk the talk.