Taxes are Bad. Inflation is worse. Ignorance is worst.
Yes, taxes are up.
Yes, it’s very steep.
Yes, it could’ve been done at a slower pace.
The million dollar question is:
At what cost?
Want to know?
Let me tell you more.
@CSE_Media #EconomicCrisisLK
1/6
Yes, taxes are up.
Yes, it’s very steep.
Yes, it could’ve been done at a slower pace.
The million dollar question is:
At what cost?
Want to know?
Let me tell you more.
@CSE_Media #EconomicCrisisLK
1/6
Yes, taxes take our money away. We feel it as it’s visible.
But if you look closely, inflation takes away more.
It’s a silent serial killer.
It’s worse for low/middle income groups, because they spend most % share of their income on food.
Remember, food inflation is 95%.
2/6
But if you look closely, inflation takes away more.
It’s a silent serial killer.
It’s worse for low/middle income groups, because they spend most % share of their income on food.
Remember, food inflation is 95%.
2/6
What creates inflation?
• Cost-push
Supply side effects (shortages, disruptions, etc.)
• Demand-pull
Demand side effects - related to money printing & low interest rates.
The spike in inflation was mostly due to demand side, while recently was due to supply side effects.
3/6
• Cost-push
Supply side effects (shortages, disruptions, etc.)
• Demand-pull
Demand side effects - related to money printing & low interest rates.
The spike in inflation was mostly due to demand side, while recently was due to supply side effects.
3/6
Why did Govt print money?
Among many other things, Govt revenues fell, but expenses kept rising (+ Govt kept spending).
Then, Govt wanted to borrow, but very few lent money because rates were set too low.
So they had no option but to print money.
Rest is history.
4/6
Among many other things, Govt revenues fell, but expenses kept rising (+ Govt kept spending).
Then, Govt wanted to borrow, but very few lent money because rates were set too low.
So they had no option but to print money.
Rest is history.
4/6
Why Govt revenues fell?
There was a massive tax cut in 2019.
Estimated loss in tax revenues were ~LKR 800Bn.
Many experts like @ChayuDamsinghe have already wrote about this. I don’t want to reinvent the wheel.
Now, we have come a full circle.
The only way out is through.
5/6
There was a massive tax cut in 2019.
Estimated loss in tax revenues were ~LKR 800Bn.
Many experts like @ChayuDamsinghe have already wrote about this. I don’t want to reinvent the wheel.
Now, we have come a full circle.
The only way out is through.
5/6
This steep hike may not be of best timing nor manner.
But:
If not now, then when?
If not this, then how?
If not us, then who?
If you enjoyed this:
- follow me @TheGayan for more insights on #investing
- retweet the top tweet to share with others
6/6
But:
If not now, then when?
If not this, then how?
If not us, then who?
If you enjoyed this:
- follow me @TheGayan for more insights on #investing
- retweet the top tweet to share with others
6/6
https://twitter.com/thegayan/status/1580531885364895745?
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