Monday, October 19, 2015

The Deficit can easily be plugged if the few suggestions made here are acted on

Just the entries in the blog here just for October 2015 give more than enough suggestions to the Finance Minister on how to bridge his gap between revenue and expenditure. Unfortunately, we are cursed by leaders who have no grey matter to act on these simple suggestions, and instead make a pigs breakfast of a whole host of measures that are ONLY GOING TO CONFUSE and take the optimism out of the economy, and WILL BE SELF DEFEATING.

To recap, 
Slapping a one off Tax on all vehicles registered in the last 5 years by Rs15,000

Increasing the Road Tax or annual license fee for vehicles by 200% from January 2016 when the next license comes up for renewal.

Increasing the price of Petrol and Diesel by at least Rs30 a liter.

Ensuring each person is asked to use their ID or their company ID for all transactions that are then fed into a computer for purchases of any item over Rs100,000.

Ensure there is NO EXEMPT items for VAT purposes, and only allow zero rating instead, so all transactions will come under the net and NOT EXEMPT as is the case today with many supposedly state transactions.

Reduce the interest rate on many overseas borrowings as promised

Sell off all surplus motor vehicles in Govt. department by auction, and all surplus junk even for scrap, as most Government institutions are flooded with decaying property.

Cease granting Duty concessions to ANYONE not even elected officials or Govt. servants. Increase the remuneration of the top two grades of Govt. servants to get and retain top quality administrators in govt. service.

Do a 5 year forward purchase agreement on fuel imports at the US$45 a barrel equivalent for crude, that will save 50% of the fuel bill at a stroke, with the reduction in usage as well due to the price hike.

Bring the VAT net into businesses with annual Turnover of Rs100M and over.

DO NOT INTRODUCE A TURNOVER TAX as that is a disincentive for business. Do not increase the Personal Tax rates, just get the people into the tax net.
Do not increase Corporate taxes as that too will be a disincentive to business.
Do not increase VAT as that is to regressive on middle classes.
Do not increase vehicle taxes as they are high as it is.
Do not increase the already high electricity rates to any sector.
Stop the Fertilizer subsidy as it is rife with corruption and bad fertilizer

The analysis above will increase revenues and reduce costs so a benefit to the State of at least Rs500Billion will accrue and this is better advice 2000 boffins can give.    

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