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Drawing from rich to give poor will increase inflation: Karu
Tuesday, 20 December 2005 - 2:56 AM SL Time
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The main Opposition UNP in parliament said yesterday that the staggering budget deficit would lead to increased inflation, which would severely affect the masses.
Speaking on the fifth day of the budget debate, UNP Deputy Leader Karu Jayasuriya said the current budget deficit was a staggering Rs. 195 billion ' and the government must think practically and be pragmatic in finding means to bridge this gap.
'In bridging such a huge gap the government must think where the money is coming from. In such cases the government has to resort to obtaining grants, loans and subsidies. If this gap cannot be bridged then inflation will rise,' he said.
Mr. Jayasuriya said when the government of Ranil Wickremesinghe came into power in 2001, inflation was at 17.2%. 'We brought it down to 7.8%. In January this year the inflation rate again rose to 16% and now the inflation rate is about 12.1%,' he said. He said the value of the rupee must be controlled and that if the rupee dropped the monthly wage earners would be the worst affected. He also said the government should encourage local entrepreneurs.
'The budget attempts to draw money from the rich sector and give to poorer sectors. There are also proposals to increase taxes. This too will affect the people indirectly,' he said. Karu Jayasuriya stressed that any responsible government should ensure employment, both local and foreign for the graduates who pass out from universities and technical colleges.
'A housemaid from the Philippines is paid about 200 dollars a month while a Sri Lankan housemaid gets only half this amount,' he said adding that in the Philippines housemaids were given three months training before going abroad. Mr. Jayasuriya added that a study conducted by the National Health Commission during Mr. Wickremesinghe`s Premiership had revealed that through training nurses more jobs could be created abroad, especially in Europe. He said that a special diploma or degree programme should be initiated for nurses and provision should be made for them to sit for the government exam.
'A nurse can earn up to Rs. 150,000 abroad,' the MP said. He summed up his speech saying tsunami house construction was delayed due to the 100 metre buffer zone policy and that the government should take steps to complete construction of houses before the Sinhala New Year.
The UNP Deputy Leader cautioned that there was a possibility of a black market being created in the agricultural areas, because fertilizer was issued on a permit system.
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Vagabond
Joined: Nov 2005
Posts: 551
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20 Dec 2005 03:05:43 GMT Report for Abuse
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As the Shri Lankan economy is tied up with ethnic conflict; the primary measure to improve the economy should be to solve this crisis.
In my arrogant opinion other factors will have very little influence over the economy.
Irrespective of other measures inflation will increase and currency will drop its value if we prevail the current situation.
Therefore, no point talking about anything else. End of. |
dumindak
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20 Dec 2005 04:24:32 GMT Report for Abuse
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Dear Karu
DO you know economics? Please go and read a good economic book before you talk or get advice from an economist.
Drawing from rich is called income tax and charging income tax will never increase inflation. Infact it is the best tool for a balanced economy. |
kiwikanga
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20 Dec 2005 06:04:11 GMT Report for Abuse
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Dumindak, I don't know whether Karu has any qualifications in economics but he does own a large footware factory in the Katunayaka FTZ and is definitely a practical economist!
Edited By - kiwikanga - 20 Dec 2005 06:05:05 GMT |
Naleen
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20 Dec 2005 06:43:27 GMT Report for Abuse
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DumindaK,
You sound like a typical JVP 'ata-pass' economist!
While requesting others to study economics, you show your complete negligence of the subject! (Typical JVP!)
Karu has never told charging tax will increase inflation. Any fool (except super-fools like you and Wimal malli) know a Rs. 195 billion gap cannot be only bridged by taxing the rich and the industry.
So the only way of bridging this gap is to increase the money supply, which is the reson for the inflation.
Learn something man! They don't teach economics at Grade eight! |
dumindak
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20 Dec 2005 07:15:10 GMT Report for Abuse
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Naleen
Be cool man, try to discipline yourself first before use the forum, no need to panic and pee in your pant.
I wrote for the heading, read the heading carefully once more.
hading is 'Drawing from rich to give poor will increase inflation'
Can you tell me how this will increase the inflation? If you are a man take up the challenge. I am here to answer you. |
Naleen
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20 Dec 2005 07:27:51 GMT Report for Abuse
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Modayo,
Excessively taxing the rich will discourage them from further investments and will bring down the production levels. Then the value of money will go down and that is the inflation.
From who you learn economics? Lalkantha?
Typical JVP! Typical Grade eight economics! |
dumindak
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20 Dec 2005 07:57:09 GMT Report for Abuse
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Naleen
FIrst thing you have to learn is to be respectful when you address a forum member.
If the money supply is same and the production level remain same will it increase the inflation? (future production is irrelavant here.) No it does not.
This ia how it will affect the economy
step 1. You are taking tax from rich, then his demanding capacity become low, there will be excess supply in the market, then prices come down. you find a deflation situation.
Step 2. Then You give tax income to poor people, his purchasing capacity will go up, demand will go up, excess supply will be consumed. deflation wil decrease and economy comes to the normal level
Did you understand?
Try to learn and never try to reply me again.I will not reply to a third grade thug. |
Naleen
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20 Dec 2005 08:19:25 GMT Report for Abuse
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Modayo,
You see the rich only as consumers! Big joke. Remember, they are the investors too. You have no brains and what you use is typical Lalkantha logic.
If you try to tax the investors nobody will invest in Sri Lanka. This is what happened in the 70-77 time and even businessmen like Upali Wijewardena invested in Malaysia.
You go and ask Inland Revenue Department how much more thay can earn even if they tax at 50% of income!
How can I call a fool in Sinhalese, if I cannot use the word 'modaya'? |
wijeyesinghe
Joined: May 2005
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20 Dec 2005 09:28:02 GMT Report for Abuse
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How? will that be
Many way most foreign governments manage their economy
Some of these are: -
1) Tax (Direct)
1 A) Branded tax rates
1.B) CGT
1.C) CTT
2) Death duty
3) Corporation tax
4) Duty
and many other ways. Government gets its income form tax. They then spend it. Some are redistributed
If we were to believe what you say is correct the UK inflation must reach three figures
But it has never been over 2 %
UNP continue to talk rubbish
Edited By - wijeyesinghe - 20 Dec 2005 09:33:58 G |
Naleen
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20 Dec 2005 10:10:40 GMT Report for Abuse
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Wijesinghe:
UK is a rich country. Sri Lanka is a poor country. UK has 8 million tax payers. Sri Lanka has only 40,000 tax payers.
Even if you tax 50% from these 40,000 what you can get is LIMITED. Understand? LIMITED. That is hardly adequate to bridge the budget deficit.
What are the other options the government has?
(a) It can increase the indirect tax (which will definitely affect the poor too)
(b) It can increase the money supply and then increase the inflation.
Mahinda maama will opt for the second.
If you want to see, please note down the prices of some essential items today. Then wait another year and compare those with the prices of the same items on Dec 20, 2006.
You yourself will understand what Mahinda maama have done!
This is what the JVP modayaas cannot understand. Not surprisingly, because many of them have not even passed Maths at GCE (O/L)
It is the JVP modayaas who speak rubbish, not the UNP... |
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