Hikes In Income Needed For All Categories Of Employees

These comments are being written before President and Finance Minister presents his tenth consecutive budget to parliament and it will be read on Sunday when all controversial issues will be ‘all over the bar the shouting’. Nonetheless our comments will reflect on the expectations of the people before the presentation of the budget. It will enable them to gauge to a great extent whether the budget has addressed the essential needs of the people.

Whatever statisticians may say about the rising GDP, per capita income and low rates of inflation, the reality is that people find the cost of living rising beyond their means. Thus if the budget is a people oriented budget these concerns will have to be addressed.

Much before the budget, reduction in the electricity tariffs and prices of petrol, diesel and kerosene were announced. This was welcome relief however much the Opposition may argue that the reduction in the price of these commodities was imperative because of the drop in prices in the world market. But that alone is not sufficient. The price of food commodities and other essential foods have risen imperceptibly through indirect taxes, usually not officially unannounced. The middle class usually does not go to government institutions for treatment and purchase of drugs find their health bills have risen to intolerable amounts. Even though fuel costs have been reduced the prices of commodities that are transported over long distances such as vegetables have not reflected any substantial changes.

Much of the element of surprise that was there in budget presentations disappeared in the seventies when the Marxist Finance Minister Dr N. M. Perera presented his budgets. In the pre-Dr Perera times budget deficits were largely bridged with the hikes in tobacco taxes and taxes on alcohol duties that largely affected consumers of arrack and beer. This led to guessing games with stocks of cigarettes and alcohol being hoarded before the budget presentation to be released to the market after increased prices were announced. Dr Perera did away with such speculation by announcing increased taxes before the budget through gazette notifications. Dr Perera’s modus operandi through gazette notifications applied to other commodities as well and the practice is being continued even today.

The people’s representatives in parliament have no choice in voicing such increase of prices through the government gazette because even they are made aware of such increases through gazettes.

Despite the anger and moral indignation vented on the tobacco and alcohol industries by an assorted group of activists, finance ministers have found that these two commodities are a perpetual and an inexhaustible source of income. However much the prices are increased, whatever warnings are issues to the public, the demand has been continuous. Moralists and even medical scientists gleefully approve increase in prices knowing well that the toxic materials will be consumed at increased prices. It should remind some such conscientious objectors of Bertrand Russell’s saying: Infliction of cruelty with a good conscience is a delight to all moralists. That’s why they invented hell.

It is likely that President Mahinda Rajapaksa will call this budget a development budget.

But a budget presented with less than three months to go for a likely Presidential election is going to be very much an election budget. The president who is also the finance minister cannot be blamed. In any democracy the primary objective of any political party is to win the election and thereafter consider what budget proposals should be implemented even through the gazette after the presentation.

In political circles there is speculation that the salaries of government servants are to be increased by Rs 5,000 per month. The UNP, not to be outdone, has promised a salary hike of Rs 10,000 for this category of employees. Government servants deserve a substantial salary hike but so does every other category of employee, particularly poor farmers, who are making a living off the soil, have no salaries, no crop insurance and have taken a severe beating from the drought. Private sector employees are employees of lesser gods.