IMF backed high tax regime could give further rise to informal economy: Dr. Palmer

31 January 2024 01:13 am - 9 - {{hitsCtrl.values.hits}}

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Says current tax regime could slow down economic recovery

Urges government to take bold stance with IMF on taxation

Notes that lower tax rate must be accompanied with digitisation and cutting down of excess bureaucracy

By Nishel Fernando

Dr. Tom G. Palmer

A top free market capitalist this week cautioned that the current International Monetary Fund (IMF)-backed high tax regime could give further rise to informal economy in Sri Lanka, thereby slowing down the economic recovery and ultimately narrowing the tax base.

Atlas Network Executive Vice President (International Programmes) Dr. Tom G. Palmer pointed out that nations plunged into debt crisis have come out of crisis by embracing a simplified low tax rate, and rejecting IMF-prescribed high tax rate.

Dr. Palmer shared his comments at a panel discussion held at the Economic Freedom Summit organised by the Advocata Institute in Colombo.
He noted that Greek government’s bold stance against IMF-prescribed high taxation to pay off debt has ultimately resulted in a booming economy led by the tourism sector and an increase tax collection due to expansion of the tax base.

War-torn Ukraine has adopted a similar move by embracing a flat tax rate, moving away from its complex ‘optimised tax rate’ which benefited corrupt oligarchs in
the nation.

Therefore, he urged Sri Lankan government to take a bold stance with IMF on taxation.
Dr. Palmer also stressed that a lower tax rate must be accompanied with digitisation and cutting down of excess bureaucracy in the public sector to reduce corruption.

He pointed out that Former U.S.S.R nation, Georgia managed to reform and replace its entire police force that had fallen deep into corruption and human right abuses within a short period of three months. He highlighted that such bold policies followed by actions in fact could produce desired results.

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Comments - 9

sam silva2 Wednesday, 31 January 2024 07:42 AM

we have a PAPADAMAA - a simplified version of mr.bean a highly corrupt individual who robbed the central bank. so nothing can be expected form this clown!!! only one person takes him seriously and thats him!!!

Bobbie Wednesday, 31 January 2024 09:52 AM

IMF need to understand that 80% of the population are extremely struggling in all aspects families are in poverty even having difficulty to have a decent meal a day pay bills medication etc...you people need to have balance by reducing unwanted expenses tax the rich super rich Help stimulate the economy WHITHOUT taxing on food essentials needs its all good to pay debts but don't tax on poor people find effective ways to help devolop the nation at precent even devolp nations finding ways to reduce taxes due to high coast of living inflation etc etc. For the past 2year's prices have gone up approx 300 to 500% which have created povrty starvation etc etc...

Happylife Wednesday, 31 January 2024 11:34 AM

Ppl here are happy with these taxes. Who do you borther sir? The hotels are full, we are getting more tourists, locals are traveling and booking hotels and they are full, even if the kottu rotti is 2000 rupees we have customers to buy, ..... Everyone is happily living in sri lanka . Even the dengue mosquitos.. dont bother us sir.

johan Wednesday, 31 January 2024 11:45 AM

The subsequent govts.which were in power have no much idea to handle economyFinally they brought the country to bankrupt .So we will go for a change in near future

Bernard Jayatilake Wednesday, 31 January 2024 12:01 PM

This statement would definitely serve as No.1 election slogan for the opposition against the government if used properly.

joshua Wednesday, 31 January 2024 12:09 PM

People may be Ok to pay high taxes as long as there is a proper return through Government service and action is being taken to tackle bribery and corruption. But this Govt has imposed high taxes as required by IMF without taking any action against the corrupt Parliamentarians (need not mention names as everybody knows) and Govt officials. They are protecting these thieves simply to save themselves. At present requesting people to pay as high as 36% tax as well as consumption-based taxes is not justified by any means.

sas Wednesday, 31 January 2024 12:23 PM

The best solution to fiscal consolidation is to reduce the government expenditure. For that, the government must trim down the bureaucracy, close down unnecessary entities , trim down the hierarchies of the organizations , use IT for accounting and other administrative functions thus reducing the workforce . However the Srilanka Admirative service people in the Finance ministry do not allow it to happen.

DOT Wednesday, 31 January 2024 04:55 PM

Thanks.BATA systems is already in actions ! People send cash by hand ect.

Go home Gota Wednesday, 31 January 2024 09:10 PM

If you reduce taxes we will take you to Supreme Court

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IMF backed high tax regime could give further rise to informal economy: Dr. Palmer

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