Opinion poll

Reacting to Budget 2000-01 Business leaders evaluate some features of the budget proposals for the year that begins July 16 Perhaps the most surprising step, though not unexpected, in the budget proposals for the fiscal year 2000-2001 that begins on July 16, was a massive increase in the salary of government employees. Equally surprising was the proposal to tax income from exports and dividend, though they too were not unexpected, as Indian budget in March had already provided the cue to the Nepali finance minister to do so. In reaction to the overall budget, FNCCI has welcomed it in principle though with reservations in some details (see cover feature in this issue). Business leaders who took part in the opinion poll conducted by Business Age, have expressed doubt about the efficacy and logic of some of the measures proposed in the budget to achieve the overall goals. In increasing salary of the government employees, the expectation was to achieve higher job efficiency among the employees and lower level of corruption. But, the respondents of the poll believe that it will have only insignificant effect, if any, in reducing corruption. The refrain of the respondents was that corruption has become a culture and salary can no more be an incentive for cleaner practice. Some blame it to corrupt practices of politicians and some others to lack of clear policies and rules. Business people were almost equally divided in favour and against the proposal to tax income from exports – 42% in favour and 53% against. The former argued that it was necessary to expand the tax base, and was logical because many other foreign exchange earners (e.g. hotels) were already paying taxes from their income. Thus there was no reason why only the exporters of physical goods be spared. Among those who opposed it, suggest that the income tax exemption on export earnings should be continued till the exports reach a substantially higher level than they are today. Some of them also suggest that new exporters should be continued to be exempted from this tax. Their opposition of the proposal to tax dividend income was more pronounced. Almost 66% of them were against this. They argued that it was a case of double taxation as taxes are already paid on the corporate income before earmarking funds for distribution as dividend. Such tax will work as a disincentive for people to invest in shares, and it will thwart the growth of the capital market. One respondent who supported the finance minister’s proposal, described it as ‘fair’, but suggested that the rate of the tax should not be increased, lest the investment would be directed towards other non-productive or even counter-productive fields. About which sector the budget favoured the most, the majority of respondents either said that it favoured nobody, or that they were not able to say which sector was actually favoured. One respondent said "I don’t see any sector which is favoured, except the bureaucrats." His reference is towards the hefty salary increase.	1. How much is the corruption in bureaucracy likely to fall with the increase in the salary of the government employees?
	2. How do you view the proposal to tax income from exports?
	3. How sufficient do you find the provisions promised in the budget to check smuggling?
	4. How do you view the income tax on big commercial farming, while exempting other forms of agriculture?
	5. How do you view the proposal to tax dividend income?
	6. With this budget, which sector seems to be the most favoured?