View from Colombo: Businessmen divided in response to budget

Political uncertainty almost overshadowed last week's budget proposals which are now being discussed in the island's parliament. These proposals initially planned for announcement on November 12, were announced on November 19 when the parliament, suspended by President Chandrika Kumaratunga on November 4, was summoned after a two week break.

In the not so distant past, even about a decade ago, there was general curiosity and the country looked forward to budget surprises while many sectors even took precautionary measures to overcome the effects of speculated proposals. But things are changing fast as this annual event appears to be evoking less and less public attention.

So much so even last week's proposal to increase salaries for the public sector failed to evoke a major response. And responding to government request to follow suit, private sector establishments clearly pointed out that salary increase and other expenses should be based on market forces.

As usual the government claimed that the budget which targeted the investment sector, broadened the tax base and increased revenue collection from the commercial sector, is paving the way for strengthening the economic recovery and help maintain sustainable growth.

Donor agencies

International donor agencies, especially the International Monetary Fund and Asian Development Bank, too hailed it as a good budget which addressed most of the challenges faced by the country.

But the opposition, as usual, continued with the tradition of criticising the proposals as if they had done a better job when they were in power. While former finance minister Ronnie De Mel described it as one of the most unsatisfactory set of budget proposals ever issued after independence some even went to the extent of saying that these proposals take still further the government's commitment to the IMF.

Even the business community was divided in their response though in general the private sector praised the budget while being critical of certain tax proposals that would impose a burden on companies.

Expressing disappointment, one section of the business community said "the budget could have delivered some kind of financial assistance to the people." Some others said that "there is no significant fiscal support for the private sector and, instead, they have decided to withdraw all key tax concessions and imposed further burdens.

Peace dividends

But others hailed the proposals as "people-oriented and not political" while some even described it as forward thinking. According to some commentators, "the budget did not impose too many burdens on ordinary people and, in a sense, started showing for the first time visible signs of peace dividends."

A leading businessman termed the budget devoid of surprises and the government jumped the gun in an unprecedented move by releasing some of the proposals in advance due to the political crisis triggered off after President Chandrika sacked three key ministers.

But one of the welcoming changes in this budget is the high allocation for capital expenditure to improve long overdue infrastructure development. Of course, the 15 per cent tax on the profits of corporate from the sale of stock market shares has been opposed understandably by stock brokers and investors who made super profits during the recent boom.

But there is also good news. And that is Finance Minister K.N. Choksy's announcement that Prime Minister Ranil Wickremasinghe is open to all just and reasonable requests to make amendments to some budget proposals.

On top of all, what is expected by everyone is the much needed reconciliation between the President and Prime Minister and the tone from the two has been welcome by all sections of the community to ensure continuous peace and thus uninterrupted growth.

Latheef Farook is a Sri Lanka-based journalist