Implementation before it happens
Sunday, 15 May 2011
Mahmudur Rahman
Records are misleading at times. When one considers all the sharpened pencils that have a go at governments for their perennial failure to implement its ADP projects only to come up with more ambitious targets for the next year it does seem somewhat unforgiving. We often fail to take note of the simple way that the market puts in place proposals of the government that haven't even been placed in parliament. The budget is a golden opportunity for businesses to make windfall gains merely from speculation. Perhaps that's where the stock-market bruised picked it all up from. Whenever government reduces taxes on products, the impact takes three to four months or longer to be implemented. The simple reason offered is that goods have been purchased prior to the decision and therefore cannot be sold at cheaper prices. Not that these so called 'cheaper prices' ever really find their way to the consumer. But when it comes to mere speculative rise of taxes, the impact is instantaneous. Take for example the much maligned habit of smoking and the cigarette. Already one of the highest, if not the highest tax product in sight, the mere mention of tax increases by the Finance Minister has led to a prices taking a nearly 10% hike. The retailer shrugs his shoulders to say 'we don't get supplies and the wholesale sells at premium rates'. The companies know nothing about it and have maintained their supplies as per demand. It is the business that are manipulating matters by choking supplies and holding on to what they expect a significant rise. The consumer never had and probably never will have a platform from which to voice their concern. Smokers more so because they usually suffer from a sense of guilt; and as a test case the initial drop in consumption whenever prices go up is usually compensated within a few months. But given that the current price hike has nothing to do with actual rise in taxes or hikes by the producer, there's little doubt that the month of May will be one to make merry through a cool siphoning off a huge chunk of whatever change the consumer can afford. And should there be a rise in taxes of any product the consumer can look forward to prices going up the very same day as the budget is announced. At times such as these the Consumer associations prefer to hold their peace in the realisation that there is little they can do. Someone obviously can and won't but that's a different matter altogether. (The writer is a former Head of Corporate & Regulatory Affairs of British American Tobacco Bangladesh, former CEO of Bangladesh Cricket Board and specializes in corporate affairs, communications and csr. He can be reached at mahmudrahman@gmail.com)
Records are misleading at times. When one considers all the sharpened pencils that have a go at governments for their perennial failure to implement its ADP projects only to come up with more ambitious targets for the next year it does seem somewhat unforgiving. We often fail to take note of the simple way that the market puts in place proposals of the government that haven't even been placed in parliament. The budget is a golden opportunity for businesses to make windfall gains merely from speculation. Perhaps that's where the stock-market bruised picked it all up from. Whenever government reduces taxes on products, the impact takes three to four months or longer to be implemented. The simple reason offered is that goods have been purchased prior to the decision and therefore cannot be sold at cheaper prices. Not that these so called 'cheaper prices' ever really find their way to the consumer. But when it comes to mere speculative rise of taxes, the impact is instantaneous. Take for example the much maligned habit of smoking and the cigarette. Already one of the highest, if not the highest tax product in sight, the mere mention of tax increases by the Finance Minister has led to a prices taking a nearly 10% hike. The retailer shrugs his shoulders to say 'we don't get supplies and the wholesale sells at premium rates'. The companies know nothing about it and have maintained their supplies as per demand. It is the business that are manipulating matters by choking supplies and holding on to what they expect a significant rise. The consumer never had and probably never will have a platform from which to voice their concern. Smokers more so because they usually suffer from a sense of guilt; and as a test case the initial drop in consumption whenever prices go up is usually compensated within a few months. But given that the current price hike has nothing to do with actual rise in taxes or hikes by the producer, there's little doubt that the month of May will be one to make merry through a cool siphoning off a huge chunk of whatever change the consumer can afford. And should there be a rise in taxes of any product the consumer can look forward to prices going up the very same day as the budget is announced. At times such as these the Consumer associations prefer to hold their peace in the realisation that there is little they can do. Someone obviously can and won't but that's a different matter altogether. (The writer is a former Head of Corporate & Regulatory Affairs of British American Tobacco Bangladesh, former CEO of Bangladesh Cricket Board and specializes in corporate affairs, communications and csr. He can be reached at mahmudrahman@gmail.com)