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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2708

The Budget – Good or for Bad?

By Raja Arabewela

A significant feature in this Budget for the year 2009 is the massive Defense expenditure. The president wishes to do this regardless of the great increase of the budget deficit and the global recession in order to “establish a stable economic environment to restore democracy, consolidate human rights and achieve economic development as a priority need”. The government obviously expects, to finish the war soon, to hold Provincial and Local elections, to establish democracy in the North and to start on long overdue development work.

Apart from the ups and downs of the various taxes, a highlight in the budget is the reduction of fuel prices. Here, the reduction of Rs. 15 per liter from petrol may not have a big impact on its’ users but the kerosene and diesel users and the society in general, could feel the reduction should the benefits trickle down as expected. Although the government expects a 25% reduction in bus fare, the bus operators are already up in arms against it. It is interesting to see how far they can go down with the effect of increase in taxes of other needs of the trade. Even the cost of most goods could and should go down with the lower transport costs. But again, people will have to keep their fingers crossed and hope for the best.

It is the earnest hope and expectation of the general public that not only the bus and train fares to go down but also a reduction of the cost of almost all the consumer items due to the lowering of the diesel cost. There again it is a matter to see how the interference of import and other taxes may come in to play.

The reduction of VAT from 15% to 12% of course will give a boost to the sectors like tourism, construction, industries, telecommunications, insurance and leasing etc. The soldiers engaged in action, government servants and the pensioners are given a boost by the increase in cost of living allowance and the salary advances

The levy of import taxes on a wide range of goods may have a considerable effect of the consumer. While some levies may affect the general consumer, the others may affect only the consumers of ‘luxury’ items. Some of the goods affected include imported food items like fruits, vegetables, milk powder, sugar, chocolates, biscuits, grains, salt, maize, animal feed etc, leather goods like shoes, bags, belts etc, readymade clothes like, sarees, sarongs etc, household goods like fans, fridges, air conditioners, ceramic ware etc, rubber goods like bus and other tyres, and polythene and plastics. The Nation building tax of one percent too could add to the woes of the consumer.

According to the government these taxes are imposed in order to reduce imports and to encourage local industries. It is a matter to see how this import restriction may affect the international trade. But, if the local farmers and industrialists take the advantage of this situation and take steps to increase local productions it could have long term benefits to the country as a whole.

The government says that this budget is aimed at defense, establishing peace and industrial and social development. It expects people to grow more and produce more agricultural and industrial goods when the existing prices go up. The government hopes it inevitably will be so, as and when the people see the opportunity. They hope and expect that way because they are the government.

Meanwhile the opposition says it is ludicrous to believe so without establishing the right environment by doing the ground work necessary for such development. Again, that is because they are the opposition.

So it is left for the common man, the consumer to wait, observe and experience the outcome of these proposals of this budget.

- Asian Tribune -

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