Saturday, May 14, 2016

SL asked to join the global tax transparency initiative – RECOGNITION!

Is it due to the new Government’s emphasis on cleaning up the stables, making itself known to the world, that there is a collective wish on the part of the people reflected in the mandate given to the Government that is also reflected in this renewed call to join this elite club?

It is important that this is seen as the start of a long road in ensuring equity in tax yield where those who can pay a fair share, in a Country that has one of the most regressive taxation environments in the world.

Hardly any of the top 1,000 wealthy people in Sri Lanka pay more than a minimum tax of less than Rs500,000 per annum, when in fact their incomes require them to pay at least 10 times that,  on direct  taxation rates, (15%) which are one of the lowest in the world.

Essential Food in Sri Lanka is taxed very heavily, namely sugar and flour as the Govt. revenue for the most part is collected on imports, including food items, and from taxes on liquor and tobacco, all consumed by the lower middle classes as a percentage of disposable income.

The main plan of this global transparency initiative is to equitably tax income and gains, and until people who are high earners are brought into the direct taxation net, such as doctors, lawyers, tuition factory owners/teachers, Parliamentarians who sell their car permits for Rs40M and don’t pay tax on this gain, Car Dealers, and Hardware Merchants, there is no equity in tax.

It is the DUTY of this Govt. to unashamedly pursue the obvious channels of raising taxes, rather than the tried and tested method of going after those who actually pay taxes and try and find out if they can squeeze more out of them, by unfavorable tax assessments devoid of any reasonableness in calculation.

Let us hope this initiative yields the desired results in collecting taxes that have long been left uncollected and therefore being of unreasonable benefit to the earner at the expense of the state. 

Let us not forget that the state is made up of the people of the Country, and it is the duty of the state to ensure that there is fairness in taxation, something severly lacking in Sri Lanka, that when compared with Countries the world over is more like a massive tax haven for the rich who ride around flaunting their wealth. Less than 1% of the people in Rs10M vehicles have a tax file, while 95% of direct tax payers don’t have that value of vehicle! 

They don’t have surplus funds easily earned to spend that way!

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