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Budget myopia

6 March 2015 03:44 am - 0     - {{hitsCtrl.values.hits}}

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It was promised that all subsidies and price reductions would be from savings derived from eliminating wastage of public funds without imposing any new taxes. Presumably such promises are only to the poor.

 


The mansion tax seems a veiled attempt to hit a handful of cronies of the previous regime. It is difficult to imagine that the ladle of power served more than 50 individuals. That leaves 950 innocent legitimate tax payers suffering the same fate. Labelling the rich as undesirables is the wrong message to every entrepreneur in the country.

Entrepreneurs go into business to get rich. They also employ people. It is the rich who also provide the country with the highest savings per capita. It is these savings that form the capital of the country. Why kill the goose that lays the eggs?

If all the new commissions to be established identify those with ill-gotten wealth, efforts should be made to catch and penalize them. Not tar all with the same brush.

The exit tax is an abomination which penalizes people who have contributed to the economy all their lives and would wish to leave only because of the complete breakdown in law and order. The 20 percent of a legitimate but paltry US $ 150,000 maximum limit without provision for total capital transfers is not the best way to induce Sri Lankan expat experts to come back to Sri Lanka!Hopefully, no different rules for expats at the expense of the citizens who stayed in Sri Lanka during the war years!

Sri Lanka is notorious for free hand-outs. When a budget for the poor is not linked to productivity, the economy regresses. With an alleged unemployment rate of 6 percent and under employment inversely proportional thereto, a budget that pays people more lowers the productivity index even further. Together with the reduced commodity prices, both measures being crowd pleasers, they are a certain recipe for higher inflation again and the election promise-induced cycle continues. With Sri Lanka now allegedly classified as a middleincome country t hat does not qualify for concessionary funding, it may be a good time to formulate a clear definition of ‘poor’, particularly as the state claims that poverty is in the low single digits.

When a government assumes everyone is poor, everyone agrees. Anything for free is taken whether of use or not. A wonderful Sri Lankan trait! This beggar-thy-neighbour attitude is practically state sponsored. Never too late to be ashamed of being a nation of beggars!

The work ethic, so valued by our forefathers, has all but disappeared among the general working population. The unbridled social state drives indiscipline in the workplace, drops in productivity and degradation of values.

Why the ban on casinos other than the government’s obvious witch hunt for the personalities involved and the moral convictions of some of its strange bedfellows? Casinos, like nightclubs of varying hue, are an accepted form of after-hours entertainment the world over. Considering the fact that 80 percent of all betting in the country is on horse racing, where there are no restrictions on locals, why ban casinos where no citizens are allowed?

The writer is not a casino goer but understands that they are an integral part of the international hospitality trade. Cutting one’s nose to spite one’s face seems puerile and counterproductive. If Sri Lanka expects to capitalize on the high-yield business and tourist segments, such ad-hoc decisions for political expediency are self-defeating. Short-sighted political adventurism has been the bane of this country. Is history repeating itself?

It is not casinos or stock markets that are bad. It is their misuse for illicit purposes. Are the crooks cleverer than the cops? So far it would appear so, unless of course they are in collusion.

Where did the so-called mafia who allegedly number no more than a dozen acquire such large volumes of seed capital to move markets at will in the first place?

The stock market manipulation in the last five years has been far worse than any casino. At least a casino wins from the wealthy. The stock exchange was just the gaming platform bankrolled by the mafia. Is it possible that most of the ill-gotten wealth is hiding in plain sight in the stock market and other debt instruments which are natural laundering facilities? Are the foreign funds operating only fronts for their local masters? Does net foreign selling mean only exit from the market or exit from the country? Or shuttled back and forth from offshore accounts in the country!

Meanwhile, two potential sources of considerable income and savings are continuously ignored, paradoxically both intertwined.With 80 percent of alcohol consumption being illicit ‘Kassipu’, a Rs.10 excise tax per bottle, would generate enormous earnings and subsidize supervision to ensure that no toxic substances are in the process. The only pragmatic assumption is that banning it when it cannot be practically enforced serves only to keep law enforcement unproductively occupied while creating a lucrative opportunity for bribery. The state cannot control the masses consuming alcohol but they can control the quality and generate earnings with obvious benefits in obviating toxin-related ramifications in public health.

Likewise the potential savings in fertilizer subsidies are also related to the foregoing. Approximately 40 percent of fertilizer subsidized is resold to the Kassipu trade. Suggest you subsidize the rice produced and not the fertilizer.

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