Excise Chief won’t act on Parliament instructions

By Shamindra Ferdinando

Chief Financial Officer of Customs, Anura Muthukude, yesterday (26) disclosed that the Treasury would lose taxes amounting to approximately Rs 57 bn owed by public sector importers over the years.

Muthukude said that this was due to the public sector being allowed to clear goods without paying the applicable taxes as directed by successive governments.

This revelation was made at a press conference held at the President’s Media Division (PMD), at Janadhipathi Mawatha, to explain the status of revenue collection undertaken by the Inland Revenue, Excise and Customs.

Of the 38 importers who had been categoried in this regard, 37 were public enterprises, the official said.

The official explained that the Treasury couldn’t, under any circumstances, recover the money owed to them.

Deputy Commissioner General Tax Policy, International Affairs and Legal, Inland Revenue, B.K.S. Shantha, and Commissioner General of Excise, M.J.Gunasiri, explained efforts made by their respective institutions to meet revenue targets set by the government.

The top Customs official said that they had no option but to abide by government directives regarding the release of goods without paying the applicable taxes.

At the onset of the media briefing, the PMD declared that their intention was to clear misconceptions regarding tax collection.

Responding to The Island query regarding the Excise Department’s failure to collect Rs 7.9 bn in taxes from liquor manufacturers in spite of a specific directive issued by the Ways and Means Committee of Parliament, Excise Chief Gunasiri said that he couldn’t go ahead with such instructions unless cleared by the Secretary to the Treasury Mahinda Siriwardana.

Gunasiri declared that he had to abide by instructions issued from the Secretary to the Treasury as he was his Chief Accounting Officer.

According to a statement released by Parliament, on 11 August, the Excise Department hadn’t carried out instructions issued by the Ways and Means Committee, claiming that the Commissioner General of Excise didn’t receive Finance Ministry approval.

Having presented facts and figures related to the revenue collection since 2019, Gunasiri declared that he could comfortably meet the staggering Rs 232 bn revenue target set for 2024 by the government.

Gunasiri said that last year they collected Rs 179 bn and the target had been raised by Rs 53 bn (29.6%) this year and efforts were being made to further strengthen the revenue collection process.

Commenting on continuing controversy over the issuance of liquor licenses with the Opposition repeatedly alleging that liquor licenses were issued to influence crossovers in the run-up to the presidential election, Gunasiri explained the introduction of a new scheme to collect as much as Rs 2 bn from this exercise.

Gunasiri revealed that of that envisaged amount Rs. 1.75 bn had been collected so far.

sought an explanation from Deputy Commissioner Shantha whether the government consulted the Inland Revenue before the recent announcement regarding a sharp salary increase in January 2025. The Department’s views were sought as the government recently declared that implementation of Rs 10,000 salary increase to public servants would compel them to increase current VAT from 18% to 20%.

Shantha politely said that he was not aware of consultations taking place between the government and the Inland Revenue Department.

Chairman of the Expert Committee on Public Service Salary Disparities, Udaya R. Seneviratne, last week told the media at PMD that the basic salary of public service employees would be increased by a minimum of 24% for primary-level service categories. For all government officials, salaries would be gradually increased from an average of 24% to 50%, depending on current fiscal feasibility, Seneviratne said.

Seneviratne added that in light of prevailing inflation and economic conditions, a cost of living allowance of Rs. 25,000 would remain unchanged for three years and would be provided to all government employees for three consecutive years, starting from January 2025, with 2025 being considered the base year.

Shantha explained how the legal process in addition to the Tax Appeals Commission procedures caused quite significant delays in tax collection for obvious reasons.

The official said that anyone who felt being wronged by the Department could move even the Supreme Court. As much as Rs 878 bn had been tied up in legal processes at varying stages and posed serious challenge in meeting collecting targets.

Shantha declared that so far the Inland Revenue was on track to meet the 2024 revenue target of Rs 2024 bn. The official released data to support his declaration.

Muthukude said that they too could meet 2024 revenue target of Rs 1533 bnin spite of serious shortage of workers. “Of 3090 approved cadre, we are operating with 2150 people with a staggering 940 vacancies,” Muthukude said, adding that 30.4% vacancies existed.