Wednesday, September 19, 2012

Budget for 2013 commences...

As expected, the first installment of the budget for 2013 was announced at midnight yesterday. Taxes on canned fish were increased by Rs.25 per can and taxes on potatoes by Rs.20 a kg. The commodity levy now stands at Rs.50 on a kilo of potatoes and Rs.75 on a can of fish. These special commodity levies are over and above the VAT of 12%, the Ports & Airports Levy and Nation Building tax that are applied to all imports, which means the total tax is in fact a lot higher than the above figures. Customs duty, if applicable, is over and above this lot.

A spokesman claimed that this was to protect farmers but informed observers are aware that this is nothing of the sort, just another tax to feed the bloated state machinery. The Customs website has a list of the recent changes to tariffs that is worth reading, just to know how much is being extracted from consumers.

The timing was also in line with expectations, shortly after the end of the provincial council election and just before the start of the T20 cricket matches. Expect further installments of the budget around important matches. Consumers would do well to stock up on arrack, cigarettes and dry rations over the next week or two, you will save some money.

The closing line in the announcement that "the country has been reached self sufficiently in production of rice and maize and local farmers have been encouraged to provide above goods in order to meet 50% of local consumption requirements" is laughable and not just for the atrocious English.

Local maize, of inferior quality (because the climate is not right) is twice the cost of imported maize, which explains why chicken prices are so high (maize is the principal ingredient in poultry feed). Meanwhile with water diverted to feed the industrial scale maize farming (under the control of politicians who skim the profits) ordinary farmers are left without water. This is also the problem with the inefficient local sugar production (where new taxes have also been imposed, to "protect the local farmer-ie politician). The extent to which agriculture is now under the control of politicians is amazing, a worthy subject of further study.  

Analysts in the meantime will need to start the tedious business of tracking the "budget", one gazette notification at a time over the budget season, which will end in the first week of November. The second season of the " budget" starts in March or April, depending on what the sporting calendar holds and the prevalence of the long weekends. What better time to introduce a tax than when a lot of people are busy arranging a holiday?

The treasury has mastered the art of taxation by stealth, but the shroud is beginning to wear rather thin and one wonders when the public at large will see through the whole charade.

Parliament, in the meantime is fast asleep. Should someone wake them up, to remind them what their their role should be?

A key role of Parliament, and of the House of Commons in particular, is to hold the Government to account for expenditure. The Government intends to make it easier for Parliament to do so by improving the transparency and accountability of Government expenditure, in line with recommendations from the House of Commons Treasury Committee" (The Governance of Britain, Green Paper on constitutional reform, 2007)


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