Politics trumps professionalism!

Published : 9:07 am  December 9, 2015 | No comments so far |  |  (551) reads | 

Untitled-6As the new government is heav i ly caught up with the tweaking of its financial plan for greater economic prosperity, a top economist in the country pointed out that politics in the most cases trumps professionalism as budgets end up being political manifestos instead of serving as governance or planning documents. Citing revenue predictions in budgets as a straightforward example in this regard, Verité Research Executive Director and Head of Research Dr. Nishan de Mel s a i d f r om 2006, it was projected for revenue as a percentage o f G D P to increase, whereas the actual direction of this factor moved in the exact opposite direction. He showed that the outcomes of such projections only create significant mismatches in terms of the expectation of the government and businesses and the society at large are have become cynical of such projections, since to date none has been met.

“There are knock on effects on making poor projection. It is like making poor plans or failing to plan properly. Not understanding how revenue is actually going to go forward sets the government to create short term revenue cultures that wil l then have to be met with short term s o l u t i o n s , ” de Mel told a forum titled “ B u s i n e s s C l i m a t e Outlook of 2016” organized by LBO-LBR. He warned that use of trade taxes and incentives to increase imports not only widens the trade deficit, but also is a short term fix that makes up for poor planning in the past and does not help reach the set revenue target. Dr. de Mel stressed that a professional assessment of the opportunities for taxation in the country should and could reveal that there are other areas of taxation which the government could tap into and collect a reasonable sum— something the successive governments have failed to do so. Taking the case of cigarettes where according to him the collectable tax can increase by about Rs.50 billion as consumption continues to surge despite increase in excise tax, Dr. de Mel asserted the failure of the bureaucracy to understand this is the cost of failure to professionally asses, calculate and calibrate taxes on an on-going basis.

“There is a serious issue as how the bureaucracy and the public sector professionalism are functioning. This is not only about politics, but the capacity and competence of Sri Lanka’s public sector,” asserted Mel. With regard to the budget deficit, the Dr. de Mel professed that it could have been addressed by finding sustainable and professional ways of increasing revenue instead of opting to cut expenditure drastically. From 2010, there have been significant cuts on agriculture and irrigation expenditure while other areas of political priorities such as defence expenditure were hardly tapered.

Dr. de Mel pointed out that the deficit cut is not happening in a manner that is necessarily helpful to the long term development of the country, and to the sectors that require investments. It is also observed budget deficit is reduced and improved just before an election. “There is a lot of predictability in a perverse way as to how the government handles finances. In a situation where there is no accountability, where there is no analysis on what the government did and what it said, the manifesto gets forgotten soon after the election. And when the numbers are available no one holds the government to account.” Dr. de Mel stressed the importance of having some regulative legislative ability to curtail such political incentives enjoyed by Sri Lankan political parties. “Politicians are invariably rewarded for this misbehaviour rather than being outshined or held accountable. This is an issue in the system,” he stressed.