Reducing high cost of living should be a priority in 2024 Budget

On the heels of the price hike in electricity tariffs, the Cabinet has given approval to increase the Value Added Tax (VAT) to 18% from the current rate of 15% with effect from 1 January 2024. This, the Government says, is essential to increase revenue but for the people already struggling to make ends meet, it is an additional burden which many can no longer shoulder.

Since the economy hit rock bottom last year, the majority of the people in the country are struggling to survive while those who committed the worst economic crimes are enjoying a life of comfort with little repentance for their mistakes that has placed the burden on the general public.

It has always been the public who are asked to tighten the belt in the time of an economic downturn but those in the ruling class and their cronies never seem to practise what they preach.

The International Monetary Fund (IMF) mission which undertook a governance diagnostic assessment from 9 to 31 March 2023 in response to a request of the Government of Sri Lanka, in its report spoke in detail on how corruption has contributed to the country’s economic crisis and the absence of any visible progress in addressing corruption and holding those responsible to account.

Despite all the hardships the people of the country are facing, the corrupt continue to profit in whatever means possible, be it in the health sector, power and energy sector, or several others. It seems those accused of corruption are immune to public anger and continue to act like babes in arms, pleading innocence while the public perception of them continues to decline.  There is no way the country could progress unless there is serious crackdown on corruption which has consumed not only the state sector but also the private sector in the country. The recently passed Anti-Corruption Act is a positive move but how effective it would be is yet to be seen. Going by past experiences, while the country has taken the lead to enact progressive legislation, oftentimes they lack proper implementation, and the objective of such laws are never realised. Hence, people cannot be blamed for looking at such laws with cynicism. They know only too well that such laws are drafted more to please international donors and other international partners rather than to seriously tackle corruption in the country.

President Ranil Wickremesinghe told the Cabinet last week that he proposed to increase public sector salaries in the Budget due on 13 November. To the private sector he can appeal to follow suit, but it would be in the hands of the respective employers to comply. The state sector employees amount to around 1.2 million, and the private sector employees around 3.4 million. Hence, it is imperative that salaries of workers in both sectors are given a substantial hike.

But salary hikes alone would not ease the burden of the high cost of living on the public. There are millions who are unemployed, living on pensions and Government welfare schemes, and what they need is a reduction in the cost of essential goods and services.  

The meagre income earned by the majority of the people in the country cannot be stretched any further. In the Budget, , the President, who is also the Finance Minister, must first and foremost address the issue of the high cost of living. The public cannot bear to pay any more taxes nor can they afford to pay higher utility bills. Saving the billions that the country loses annually due to corruption, mismanagement and inefficiency would go a long way in stabilising the economy and bring relief to the public.