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| Sunday, 17 October 2004 |
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A new tax policy unit in the offing by Elmo Leonard A tax policy unit is proposed for Sri Lanka, Secretary to the Ministry of Finance, Dr Dr P B Jayasundara said at a seminar on recent amendments to the Tax Law. The hopelessly outdated and cramped Inland Revenue Department (IRD) is to be automated and $40 million would be included for the purpose in the next budget, Dr Jayasundara said. The Thai government has been approached for the purpose. A new building for IRD has been proposed, it was also revealed. Awaiting Cabinet approval is a proposal for Rs 500 million (Rs 103 to a US Dollar) for improving the human resource of IRD and the government of Thailand and the Indian Tax Institute have been sounded, Dr Jayasundara said. Fifty-percent of GDP comes from Board of Investment of Sri Lanka (BOI) companies, Dr Jayasundara remarked. Chairman Taxation Committee, N R Gajendran said that Excessive tax holidays given to BOI companies by successive governments was a barrier to collect the much needed revenue due to the state. For the last eight quarters Sri Lanka had experienced 5.5 percent growth in GDP, Gajendran said. But a lack of peace and political stability impeded macro economic growth. Sri Lanka's tax structure was too diversified and complicated. There was often room for the tax evader to get free and smile at his success, Gajendran said. Other speakers said that 20 years ago Sri Lanka's tax revenue amounted to 22 percent of GDP, but today, it is one of the lowest in the world. If an additional revenue of Rs 2 billion would be recovered as tax due, the nation would not have to bow to the dictates of the World Bank and other international donors for funds. If instead of tax collected amounting to 13 percent of GDP, the amount made up 18 percent of GDP, Sri Lanka could achieve a growth rate of 8 percent, it was made out. In an ideal situation, the policy maker, the tax official and the tax payer had to see eye to eye. In the natural philosophy the flower and the bee benefits from its symbiosis. In the ideal situation, the tax payer would willingly pay up, society and every citizen in the land would benefit, Gajendran said. Cigarettes smuggled into the country was robbing government coffers Rs 1 billion taxes due. There is a bigger illicit market for liquor, that coming from the formal market. Dr Jayasundra conceded that tax revenue was barred by corruption. Corruption was common to every nation, including the United States. But in USA, when corruption is detected, the politician is convicted and spends time in jail; in Sri Lanka, corrupt politicians don't even face court. |
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