Over 80% tax revenue collected from ordinary people via indirect taxes: Mangala

By P.D. De Silva
Finance and Mass Media Minister Mangala Samaraweera told a recent meeting that he was dismayed when he was told that 82 percent of the total tax revenue collected was in the way of indirect taxes, and was borne by ordinary citizens of the country.

Samaraweera said this addressing the tax payers and intended tax payers in Matara during an awareness programme on the new Inland Revenue Act No. 24 of 2017, which will be implemented from April 1, 2018.

“Therefore, I have proposed to change this ratio, which may be the highest in the world, by introducing a new Inland Revenue Tax Act, which will broaden the percentage of direct taxpayers. In the past, it was the honest taxpayer that was burdened with more and more taxes,” he added.

Similarly, Samaraweera said in the past, the taxes had been used as a political weapon as the finance minister had the discretion of granting relief or imposing more taxes at his whims and fancies but once the new Act comes into effect, this would not be possible. 

“We intend to conduct awareness programmes on the new Income Tax Act throughout the island before it becomes effective on April 1, 2018. I am happy that the first one was held in Matara. Looking back in history, Sri Lanka was known as a commercial centre. We are known to have traded with the world in the past and artefacts found at archaeological sites. 

Enterprise Sri Lanka was introduced to regain our lost status as a commercial centre. We have also introduced a scheme that the project proposals will be evaluated and accepted as collateral for new enterprises and entrepreneurs rather than the present need of guarantors,” he added.

Inland Revenue Commissioner General Ivan Dissanayaike said that most of the tax revenue collected by the Inland Revenue Department was spent on providing education, health services, security forces and maintaining infrastructure.

Samaraweera delivering his budget speech earlier this month mentioned that in the next three years, namely 2018, 2019 and 2020, Sri Lanka has to repay a capital payment of Rs.7000 billion excluding interest. In 2018, Sri Lanka has to repay debts of Rs.1970 billion excluding interest. The expected income for the year from all sources, including the Inland Revenue Department, Customs Department, etc.  would only be approximately Rs.2260 billion.

Surveys have revealed that the major portion of a family’s income is spent on tuition fees, doctor’s fees and medical bills. Hence, he requested tuition masters and doctors to come forward voluntarily and pay the state due share of their income. 

Samaraweera presented a plaque of appreciation to the highest taxpayers in the Matara and Hambantota districts, while the Inland Revenue Commissioner General presented the minister with a plaque of felicitation for taking the initiative of introducing the New Inland Revenue Act.