Govt. urged not to make tax policy decisions behind closed doors

22 October 2022 04:06 am - 14 - {{hitsCtrl.values.hits}}

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Govt. leaders have to stop pretending that people don’t understand tax, says senior economist Dr. Devarajan
Points out issue in SL is not lack of competence but lack of accountability
Says such thinking has been scourge of country for decades

As Sri Lanka has taken some bold steps in recent weeks to increase state revenue by way of increasing tax rates, despite the unprecedented economic hardships experienced by the people amid roaring inflation, the biggest mistake the policymakers continue with is making big decisions on tax policy behind closed doors, a couple of leading economists in the country pointed out.

As taxes are borne by the people and businesses, Dr. Shantayanan Devarajan said it is imperative for them to be consulted in the decision-making process. The government should do away with treating tax policies as a complicated matter that cannot be understood by the public.

“The real problem in Sri Lanka and I’ve seen in other countries as well is that politicians and political leaders have the incentive to pretend that it’s something sophisticated that the public won’t understand and therefore, feel they should make those decisions behind closed doors,” said Dr. Devarajan.

Addressing a webinar hosted by Verite Research this week, the former World Bank Senior Director asserted that tax policy or budget policy is not rocket science.

“It’s actually fairly straightforward. There’s a myth that it’s out something only, you know, sophisticated economists should be dealing with. No, it is very straightforward and it’s something that the people should know about and they can know about it because it is about their lives,” he added.

Following the gazette of the new tax policy, the public and industries have voiced their concerns on the fact that they are unable to absorb the high rates, as they are still grappling with the ongoing economic crisis. The announcement by the government came as a shock to many.

Dr. Devarajan pointed out that in Sri Lanka the issue is not the lack of competence or lack of advisors. It is a lack of accountability.

“The problem is that the government feels like they can take the decision without consulting the public.

And that’s the thing that we need to reverse in Sri Lanka; this has actually been the scourge of the country for decades,” he reiterated.

The economist asserted that the people should caution the government that the budget would be scrutinised very carefully, not just what is published but the manner in which it is implemented as well. “The people should hold the government accountable,” he said.

Expressing similar sentiments, Verite Research Executive Director Dr. Nishan de Mel noted that ultimately accountability is intrinsically important and not just instrumental in getting better outcomes for Sri Lanka, in terms of its economic recovery. “The current discussion about why the country has failed before, it has failed because of a lack of analytical planning. It has failed because it does not go through the proper processes or follow or even follow through with the processes it has. And it has failed because it does not adopt an adequate set of policies to succeed,” he said.

Comments - 14

Jamie Saturday, 22 October 2022 07:34 AM

Honourable sirs, if this country ever had one accountable politician we will not be begging from tom Dick and Harry by now... when the racist fools vote for donkeys to parliament what do u expect other than mess and foolish policy making. Pls use your intellect in a better nation. This mess of a country will never ever leave the begging nation state!!!! Double period!!!

Concerned Citizen Saturday, 22 October 2022 07:43 AM

Govt should concentrate on collecting taxes from hundreds of business (i.e Pettah importers) who do not pay 90% of taxes they should be paying. Also thousands of high earning government and SOE employees do not pay taxes ! The govt is ONLY interested in further taxing hard working and productive private sector employees and the genuinely tax paying companies.

Gunapala Saturday, 22 October 2022 07:47 AM

As a matter of fact there are two ways to minimise the gap between government's income and expenditure. One way to increase the income by increasing the taxes and other way is to reduce the expenditure. But government doesn't consider to reduce the expenditure. Reduce unnecessary expenditure like overtime payments, additional ministry's posts also backup vehicles which consume more fuel ect!!

Sambo Saturday, 22 October 2022 07:55 AM

Why is it in Sri Lanka that politician's can steal, cheat, rob and also guarded by a name sake constitution while the public are suffering untold starvation and misery and yet the IMF comes with the medicine for the public and don't even look into the assets stolen by our politicians.

Johan Saturday, 22 October 2022 10:23 AM

It is thw culture not only witj politicians but even with Government officials.. Even doctors dont talk freely with patient in SL and there is no accountability for doctors if anything goes wrong... In western country, people respect even small kids

Tax Payer Saturday, 22 October 2022 10:29 AM

It is clear to the world at large, that a substantial portion of the tax collected would be wasted on sustaining the large number of unnessary jokers appointed as Ministers and State Ministers!

Anthawadi Saturday, 22 October 2022 11:14 AM

People who blamed 2019 tax cuts are now performing acrobats. .Just imagine if these raxes were in during covid shutdown. The govt will still have to give concessions to business and salaried employees.

rama Saturday, 22 October 2022 11:20 AM

very true. these political crooks are thinking that revenue earned by taxes is their own funds to steal by various make-shift methods invented by crooks themselves. lack of accountability and audit policies make them the perfect playground to win over the poor citizens.

Unscruplous Rulers Saturday, 22 October 2022 11:27 AM

Absolutely, it is the accountability with the Tax Payers' money that is most important.Crooks abound amongst the Politicians and Officials !

Athk69 Saturday, 22 October 2022 01:48 PM

Spot on. The government is only thinking about increasing its revenue without demonstrating any understanding of how key actors and the challenges that key actors face in earning such, in order to contribute by way of taxes. As the cumulative output diminishes, so will the tax contribution, which will result in failed projections of government returns. Rather, the government should retain the previous thresholds and widen the tax net. This will result in reducing the disparity between the direct vs indirect tax proportion and increase government revenue without disrupting wider economic activities.

Spartacus Saturday, 22 October 2022 01:54 PM

Most Politicians of Sri Lanka are dumb arseholes. Many are there for purpose of making deals for their side businesses or for businessmen. Even if the country loses and public money is lost, their deals need to go through. The continuation of Sri Lankan Airways despite repeated corruption, losses and abuse is an example. The Citizens, mainly majority Sinhalese are totally ignorant and docile to all this, where these politicians have brainwashed them idiotically to believe in patriotism

Citizen k Saturday, 22 October 2022 02:34 PM

Gentlemen I beg to differ, it's not the public it is the parliamentarians who are confused.we have so many parliamentarians who claim to have Achariya qualifications.

anil Saturday, 22 October 2022 07:05 PM

govt. could earn/save millions if they just slash the excessive defense force and the money spent on maintaining them with unnecessary perks, just to satisfy the politicians fake patriotic ego. IMF SHOULD INSIST ON THIS

Percy Saturday, 22 October 2022 07:14 PM

In affluent countries we pay more taxes but returns in health and aged care in retirement outweigh these taxes.

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Govt. urged not to make tax policy decisions behind closed doors

Comments - 14

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