Tax evasion:

By Shamindra Ferdinando

SLPP MP Mahindananda Aluthgamage yesterday (25) said the Finance Ministry owed an explanation regarding its failure to regulate chartered accountants to increase state revenue.

The former minister said so when The Island asked whether the Finance Ministry had cared to verify accusations he made in Parliament on 20 Sept., about large-scale tax evasion and the role played by some chartered accountants/tax consultants in the racket.

It was common knowledge that when a tax return was submitted through a firm of chartered accountants the Inland Revenue officers hardly asked any questions, MP Aluthgamage said.

Aluthgamage said that he expected the Finance Ministry and other relevant institutions to get in touch with him. “However, they hadn’t contacted me, though the Finance Ministry on Sept. 26 assured that the Parliament would be briefed on the developments and action taken as regards the accusations within a month,” he said.

Pointing out that the promised report hadn’t been submitted to Parliament, Aluthgamage said that in spite of the financial crisis those responsible continued to evade the contentious issues at hand.

The MP said that he wouldn’t withdraw the accusations he made in Parlia-ment on Sept 20 under any circumstances. The Finance Ministry should either prove me wrong or take remedial measures as soon as possible, the MP said, urging the powers that be to address the issues at hand or face the consequences.

Referring to what he called two glaring cases of tax evasion involving prominent businessmen, MP Aluthgamage said that the Finance Ministry should go the whole hog. The situation was so bad the government couldn’t ignore the urgent need for overall reforming of the tax collecting structure, the ex-minister said. Reiterating the pivotal importance in regulating chartered accountants, lawmaker Aluthgamage revealed an instance Rs 35 bn was shown as Rs 5 bn.

President Ranil Wickremesinghe holds the finance portfolios whereas Ranjith Siyambalapitiya and Shehan Semasinghe serves as State Finance Ministers. SLFPer Siyambalapitiya is responsible for revenue collection.

State Minister Siyambalapitiya on Sept. 26 requested a comprehensive report from the Customs, Inland Revenue Department and Excise Department as regards the issues raised by MP Aluthgamage in terms of Standing Orders (27) 2. Requesting them to submit their report within two weeks, MP Siyambalapitiya assured that the parliament would be briefed within a month. Instructions were issued at a meeting chaired by State Minister Siyambalapitiya at the Finance Ministry. Among those present were Inland Revenue chief D.R.S. Hapuaarachchi, Director General Customs P.B.S.C. Nonis and Commissioner General, Excise M.J. Gunasiri.

Referring to staff-level agreement Sri Lanka reached with the International Monetary Fund (IMF), MP Aluthgamage said that the government was taking measures to enhance revenue. The parliament endorsed ‘Social Security Contribution Levy’ on Sept 08 with 91 members voting for and 10 against, the former minister said, adding that it was meant to annually collect Rs 140 bn. “Taxes are necessary. All of us understand difficulties experienced by vast majority of people struggling to make ends meet. Indirect taxes are imposed on them whereas those who should pay taxes continue to evade the taxman,” MP Aluthgamage said.

MP Aluthgamage said that the current tax appeal system should be examined as interested parties continued to exploit the loopholes for their advantage. The former minister said that the reports released by parliamentary watchdog committees, COPE (Committee on Public Enterprises), COPA (Committee on Public Accounts) and COPF (Committee on Public Finance) since the last general election revealed how the government deprived itself of the revenue by allowing interested parties to exploit the tax collection system.Lawmaker Aluthgamage said that the media recently reported a group of Inland Revenue officers complaining to the police regarding his criticism. According to Aluthgamage, the police never sought a statement from him. In fact, it was not a matter for the police, the MP declared, adding that the Finance Ministry should brief the Parliament and take whatever measures necessary to streamline tax collection.