Amidst corruption charges, IMF intervenes to streamline tax collection

New tax administration system for Excise Dept. proposed at a cost of Rs 2 bn

By Shamindra Ferdinando

The International Monetary Fund (IMF) has stepped in to help streamline tax collection here amidst allegations of corruption and inefficiency against revenue collecting authorities.

Justice Minister Dr. Wijeyadasa Rajapakse, PC, has repeatedly alleged both in and outside Parliament that the Inland Revenue Department, the Sri Lanka Customs and the Excise Department have failed in their primary responsibilities.

Revealing that a four-member IMF expert team had held a lengthy discussion with a team of Excise officers, led by newly appointed Commissioner General, Excise, Saman Jayasinghe, at the Finance Ministry last Friday (Jan.13), Additional Commissioner General, Excise (Revenue Operations and Law Enforcement) said that the ongoing project involved the Treasury, Inland Revenue Department, Sri Lanka Customs, Fiscal Policy Department, Sri Lanka Chamber of Commerce, and several other institutes.

Parliamentary watchdog committees and the Attorney General’s Department have repeatedly found fault with the revenue collecting authorities for shortcomings, while Minister Rajapaksa and former Minister Mahindananda Aluthgamage, MP, alleged corruption at every level in those institutions.

Responding to The Island queries, Kumarasinghe said that there had never been previous discussions with the IMF, though they addressed issues at hand with the World Bank.

Kumarasinghe acknowledged the urgent need to overhaul the entire system, in line with the government policy on increasing tax collection. Consequent to Friday’s talks, the Excise Department announced a move to establish a Revenue Administration System for the Excise Department (RASED). Kumarsinghe said that the new project could cost approximately Rs. 2 bn.

Minister Rajapaksa recently told The Island that an utterly corrupt revenue collection system had heavily contributed to the continuing crisis, by repetitively failing to meet targets. The exporters systematically continue to hold billions of USD abroad the while revenue authorities neglect collection of taxes and fines, Dr. Rajapakse said, pointing out the disclosure made at the Committee on Public Accounts (COPA), last year, that as much as Rs.763 bn remained to be collected.

According to Kumarasinghe, the Excise delegation discussed the entire range of issues in hand with the IMF team. The ten-point plan was meant to enhance efficiency and capacity building, the official said, adding that the department faced the daunting challenge in collecting Rs 217 bn this year. The Excise Department had never been given an annual target of over Rs 200 as the cash-strapped government struggled to cope up with the developing crisis, Kumarasinghe said.

Meanwhile, the Excise Department has launched a series of raids in Thalawa, Nelubewa and Kahatagasdigiliya following complaints received regarding fake security stickers used on bottles of arrack.