Back-pedaling budget
Editorial-December 19, 2015, 6:50 pm
The final third reading of the 2016 budget presented by Finance Minister Ravi Karunanayake was due to take place last evening as this is being written. The government has already, rightly and wrongly, backed down on several of the proposals that had been made in the face of some fist shaking and trade union action that followed the budget speech. That would certainly send out wrong signals to the country that making threats and holding the public to ransom can ensure getting what certain sections of the polity want. The recent doctors’ strike was a prime example of this. The doctors want duty free or concessionary duty car permits. That is a matter between them and the granting authority: the government. What have the poor patients deprived of their health care benefits got to do with that? Many of them did not even know of the strike of which very short notice had been given and turned up at hospitals for medication and clinics, some traveling long distances at considerable cost, only to be disappointed.
Soon after the budget was presented we said in this space that depriving MPs too of the car permits was a very sensible decision. Nobody has said up to now that the MPs will continue to benefit from a perk they have long enjoyed – it doesn’t make sense to talk about it - but it will be a foolish gambler who will wager his money on the proposition that they won’t. Giving into one section will certainly lead to giving in to all; and as everybody knows very well, the MPs are much more equal than the rest of us in this island of ours. The abject capitulation began very quickly with the government first saying that the ‘no more permits’ proposal will be diluted to a permit every ten years (or was it only once during the career of the recipient?) and then finally the near restoration of the status quo. As it is the roads, particularly in Colombo, are congested beyond belief. Yet we keep on adding to the hare brained scheme of duty free permits to privileged people, also given the further facility of flogging them in the market with the resulting horrific consequences. It was stated in a post-budget television talk show that most of the permits that are sold are acquired for high-end car imports. The seller has enough to spare from the proceeds to buy himself a small car and two cars are often added to the national fleet off one permit!
It was a long time ago that Dr. N.M. Perera as Finance Minister of the United Front Government of 1970 tried to introduce a contributory pension scheme to new entrants to the public service in place of a long entrenched benefit that public servants enjoyed from the colonial days. The minister was not trying to take away the benefit from serving public servants enjoying non-contributory pensions; but seeing the time bomb that was merrily ticking away with an ever-burgeoning unfunded pension cost threatening to explode in Treasury coffers, he tried to take a sensible precaution. But it was very quickly shot down. The situation has now worsened immeasurably and there was an attempt to correct it in exactly the same way that Perera attempted. Some noises against this proposal were made, but less stridently because the noise makers were not personally affected. They have succeeded in getting the government to add the first part of the allowance increasing public service emoluments to their basic salaries. That would mean the increases would become pensionable adding to government’s liability.
There is unfortunately no realization that all the people of the country paying all manner of taxes eventually pick up the tab for privileges that only segments of the population enjoys. When a child is admitted to Royal College or Visakha Vidyalaya, the taxpayer spends much more on him/her than on a child educated in some remote rural school with neither teachers nor facilities. Yet all the people of the country pay the taxes that go into the kitty from which state provided education is funded. Thus some are more privileged than others in the matter of schools their children are admitted to and this is true for public service pensions as well as all other welfare measures often bestowed as vote buying measures by politicians seeking election.
We said at the beginning of this commentary that some of the budget proposals that are being amended or abandoned are right while others are wrong. One such correct decision is the reduction of the emission testing charge increased to Rs. 5,000 by the budget to Rs. 1,500. It is manifestly unfair to impose on a three-wheeler the same charge that applies to a BMW or Mercedes Benz. Some equity on these matters is essential. Then there is the tax on big cash withdrawal from bank accounts with two percent imposed on withdrawals of rupees one million to 10 million and three percent on withdrawals of over Rs. 10 million. This is absurd. There has been a concerted effort over a long period of time to get people used to the banking habit without keeping huge sums of cash in their homes. Persuading people to keep their money in a bank is at least hopefully helping to draw some black money to the formal economy. Why should an estate owner or owning company pay this tax when drawing cash to make monthly payments to their workers as has already been pointed out.
What is particularly disturbing about back-pedaling on the budget is that within the so-called consensual government between the UNP and the SLFP, there appears to be at least an effort on the part of the SLFP to show that the blues have been able to win some concessions from the greens on a UNP budget presented by a UNP finance minister. Was it not the budget of the Sirisena – Wickremesinghe government? Speaking at a press conference called on Friday at the deputy speaker’s office, a group of SLFP ministers announced that 16 or the 25 proposals made by the SLFP during the committee stage of the budget have been accepted by the government. According to Highways State Minister Dilan Perera, following discussions with President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe a whole slew or budget proposals are being dropped. On this basis, it was announced by SLFP Secretary Agriculture Minister Duminda Dissanayake that all SLFPers will vote for the third reading. Former President Mahinda Rajapaksa is a SLFPer. Whether he and many of his strong supporters will vote ‘aye’ or be diplomatically absent will be eagerly watched. If they are present and vote ‘nay,’ will a run-up to a split in the SLFP begun? Abstention also may be an option.
