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| Sunday, 12 June 2005 |
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New tax culture soon to raise Govt revenue by Gamini Warushamana The fiscal authorities are now considering a soft approach to increase the government's tax revenue. Accordingly, a series of new activities have been initiated by the government to create a new tax culture in the country. These measures have been taken considering the low tax revenue in the country and difficulties in tax administration, said the Commissioner General of Inland Revenue R.P. L. Weerasinghe delivering the keynote address at a seminar organised by the International Fiscal Association (IFA) last week. Tax revenue in Sri Lanka is very low compared to other countries and it has declined in the resent past. In the 1970s tax revenue was 19% of the GDP and it had declined to 13% in year 2000. In 2004 it improved slightly to 14.2% of the GDP and the government has set a target of 15.5% of GDP for 2005. This target has to be achieved without increasing the tax rate or introducing new taxes, Weerasinghe said. This is, however, a challenge because there is a wide gap between taxpayers and tax administration. To bridge the gap it is essential to create a new tax culture rather than enforcing laws and taking tough legal action against tax evaders. The government has taken a number of steps in this connection after the last budget. In the latest move the Inland Revenue Department (IRD) has recognised good taxpayers and offered incentives and other priority treatment at airports, banks, public institutions and government offices. Gold and silver cards will be offered to recognise good taxpayers. The gold cards will be offered to taxpayers who pay one million rupees or above annually while silver cards will be offered to those who pay between Rs.500, 000 - 1,000,000 tax annually. To qualify for the cards they should also pay taxes on time. A special counter will be opened at the Inland Revenue Department (IRD) for these recognised taxpayers. The gold and silver cardholders will also get a chance of winning lotteries by drawing the card numbers. The government feels that it is unfair to charge taxes just after the new proposals were presented by the budget and without amending the laws. Therefore, all amendments to the Acts relating to tax administration were passed in Parliament and signed by the Speaker before April 1. The tax cluster appointed under the National Council for Economic Development (NCED) is another successful and novel approach. It enables experts and the private sector to participate in the formulation of tax policies. The IRD Code of Ethics for tax officers explains how tax officers should behave and deal with taxpayers. It is a public document and taxpayers can complain against tax officers who act contrary to this code of ethics. The appointment of a Tax Ombudsman is another proposal that is being discussed in the tax cluster. The Tax Ombudsman will be independent from the IRD and taxpayers can complain to the Ombudsman against any misconduct of tax officers. |
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