The Inland Revenue Service Unions are up
in arms about this proposal! See link:
According to the paper article, the
Inland Revenue Commissioner and the senior staff attended a meeting where it
was agreed to give the local agents of Baker McKenzie the task of collecting
Taxes. I don’t know what taxes, whether it is Income Tax , Corporation Tax or
VAT, but there has to be a reason for this out of the box suggestion.
It is a well known fact that the tax yield of Sri Lanka has dropped from
20% of GDP some years ago to about 14% now, and the Govt. wishes initially to
raise it to 20% so that about Rs500B of unpaid taxes can be collected.
It is also known that the staff of the
Inland Revenue just have NOT been able to collect the taxation that is due, and
either because those who should be paying taxes don’t even have a tax file, are
not being selected, or those having a tax file are in cahoots with the
Accountant of the Businessman, and both take a fee from the Businessman in
reducing his taxation liability, and so defraud the nation from its rightful
take. These are but two of the most common reasons why the taxation take is so abysmal.
No wonder then that the Govt. collects
the bulk of taxes from imports as they are easy to administer; similarly
Tobacco, and Alcohol Taxes as they are too collected at the Manufacture stage.
Telecommunication levies are also easily collected as that is ONLY from a few
companies, and VAT has been imposed on the largest companies where collection
is easy.
Instead of the 5 unions representing the
Inland Revenue Employees agitating against this privatization, they MUST
counter with a proposal of collecting the Rs500B as long as they get to share
out Rs5B amongst their staff. That is fair isn’t it? The real story is that
they are CORRUPT TO THE CORE in being bribed, who supplement their income many
times, and who have a nice life from robbery, who see their cash cow coming to
an end.
I would suggest that a new strategy is
adopted immediately. Request ALL Government departments to second two top
administrative service officers for a period of two years. Give them a basic
training in identifying potential tax payers.
Then they will be given an honorary
title like assistant commissioner general of Inland Revenue Service, and be
given a file of 10,000 people who need special attention for investigation, and
a procedure given for them as to how to tackle these very wealthy people, WHO
CURRENLTY DO NOT HAVE A TAX FILE.
So let me give you an example of how I
would tackle one person. Let us take a car dealership. I will first do some
background checks to find out who owns this. Where they bank, where he or she
lives, and asking the neighbors the period in which they have occupied the
current premises. I will also try and find out what he or she was doing 10 years
ago, to fathom if this person has started from scratch.
One reason to be armed with this
information is so that when confronted, the businessman who may have dealt with
lower level IRS employees, and been able to fob them off with a one of payment
of Rs20K, is now confronted by an assistant commissioner with a far greater
level of responsibility and standing!
This person can say that he has
knowledge of the Tax payer and that he should now have a tax file, and go
through the process. Say if he says that his stock of vehicles is worth Rs600M
and he owes the Bank Rs 100M then he has effectively earned Rs500M over a
period of 10 years starting with nothing. As he has never paid any taxes, he
can assess that he should have paid about 150M in taxes over this period, but
is willing to agree to settle an up to date tax liability of Rs 75M if paid
within 3 months, and then he will be assessed from now on a new basis as agreed
after he provides a list of the stock with him, and his transactions of the
whole year etc.
Using this type of example where the car
dealer will without question when confronted with the truth, realize it is best
to pay up Rs75M and be up to date with his taxes, if there are 1,000 senior
officers on secondment for two years, they could collect this back log say of
an average of Rs75M per person per year. The total taxation thus collected on
back taxes would be 75M X 2 X 1000 = Rs 150B
That would be a start wont it? This
brings a new pool of people onto the taxation roll, and the Staff of the Inland
Revenue Service can carry on from there, with these staff returning to their
former positions. Of course as an incentive to these SLAS staff grade 1, they
could be paid a 1% commission on what they collect.
In conclusion the Govt. should be STRONG
not to give into the threats by the IRS unions, who only care about their existence,
and not on the long term benefit of their work towards collecting the much needed
revenue for the nation.
It is time to REMOVE all the Bribe takers and Gon baases at the inland revenue service. In short transfer them all out of there. If we have a whole new culture with new people we can easily collect Rs700B from the IRS alone, and Sri Lanka will boom as deficit will narrow, soverein rating will soar, borrowing costs will be lower. Debt repayments will made easier and voila SL will be on its way to glory.
ReplyDeleteSon now you see the how many traitors loiter within this IRS!