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Editorial

Income tax a necessary evil

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Our front page lead story last Sunday, headlined “Cops join IRD to raise revenue,” scooped the news that the police has launched a new collaboration with the Inland Revenue Department (IRD) to track down unexplained wealth and chase black money. This, as our story explained, was a spin-off from the widely publicized cases involving Pastor (also called Prophet) Jerome Fernando who has still not returned to the country after the smelly stuff hit the fan and a lady named Thilini Priyamali, who had allegedly collected some Rs. 226 million entrusted to her for investment, no doubt at sky high interests rates. Her clients, including reportedly some yet unnamed politicians and others have not come forward to assist the investigation. This is most probably because they prefer not to discuss the sources of what appears to be black money.

Pastor Jerome, it has been reported, had spent as much as Rs. 12 billion on his miracle dome. This, by any standard, is very high expenditure involving big bucks. No doubt much of this cash was donated by well wishers abroad, whom he clearly does not lack. But such cash infusions are subject to various regulations and interest and other earnings from such funds, we believe, must be liable to tax. Thus it makes sense that while the police continue with criminal investigations as required, the Inland Revenue Department ensures that obligatory tax payments are made. Whether the two agencies have been hitherto sharing information with each other for the benefit of the tax exchequer, we do not know. But it is obvious that they should be. Our report referred to a “new collaboration” suggesting this was not part of the already established scheme of things.

It was reported last week that the parliamentary oversight committee for National Economic and Physical Planning examining the performance of the various agencies responsible for the collection of state revenue found they are way behind target. It is fairly well known that three departments, Inland Revenue, Customs and Excise are the big revenue collectors for the government. It is also known that corruption is widely prevalent in all three agencies.

Former Minister Mahindananda Aluthgamage who chairs the oversight committee went on record a few days ago saying that although a collection of over Rs. 3.1 billion this year had been set for these three departments, approximately only half this amount had been, collected up to now. Where the Inland Revenue Department is concerned, Aluthgamage made some startling disclosures, long suspected but without an official imprimatur. Among these he was reported in the state-controlled Daily News to have said that although there are over 105,000 companies in business, only 15,000 are taxpayers.

This is not all. The number of personal income tax files on the books of the IRD standing at 500,000 in a population of 22 million is dismally low. And of these only 31,000 pay personal income tax, it was claimed. The Daily News report said the number of personal tax files was down to 295,000 last year and this had further shrunk this year.

According to an Economy Next report we front page today there is just one taxpayer on the IRD books paying over Rs. 300 million annually as income tax. Most people would dearly love to know who this worthy is. That report also gave numbers of those taxpayers on the high end of the taxpayers list. Whether these figures are accurate or not, we do not know.. Hopefully the IRD will clarify.

It was not so long ago that the government announced that all persons above the age of 18-years must have a tax file. This is all pie in the sky. The IRD lacks the will, technology and the personnel to achieve this target – if it is indeed a target. Time was when the annual administration report of the Commissioner of Inland Revenue, now grandly titled Commissioner General, published a list of names of individuals penalized for tax offences. Several decades ago, one of these lists included the name of a lawyer who is now a cabinet minister! Administration reports issued annually by government departments now appear to be a matter of history. It would be a good thing if the practice of publishing such reports is revived.

A frequent complaint by the few taxpayers who meet their obligations is that the IRD has a weakness for squeezing already squeezed lemons – that is taxpayers already on file. While widespread evasion is rampant, people who are paying taxes are often harassed by the department. IRD once upon a time rewarded good taxpayers with privileges including the right to purchase a vehicle at reduced import duties.

Those goodies are now history. The Pay-As-You-Earn (PAYE) tax system and withholding tax (WHT) on dividends and interest was something which was easy to administer and must certainly have greatly helped collection. While steps have been taken over the years to raise taxable thresholds on individuals, these by no means have kept pace with inflation.

As is frequently said, the only certainties of life are taxes and death. Professionals have been stridently protesting about the recently increased income tax rates with some even claiming that this is part of the reason some of them are quitting the country. Lankans can legitimately say that the mileage they get for their tax rupees is not satisfactory. Income tax payers often think that they carry a vast tax burden that is not evenly distributed. That is not without truth but there is very little realization among well to do income tax payers that the poor pay a big part of the indirect taxes that flow into the state exchequer. As an old time editor of an English newspaper in then Ceylon once said, each time you strike a match or flush the toilet, you are paying a tax!



Editorial

‘Swindlers List’

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Thursday 26th December, 2024

Power not only corrupts but also makes the wielders thereof cherish the delusion that popular mandates are cartes blanches for them to do as they please and be above the law. This fact has been borne out by the despicable manner in which the President’s Fund has been misused, if not abused, under successive governments.

Thankfully, the President’s Fund is now under the microscope, and numerous questionable fund allocations have already come to light. It has been revealed that the Executive Presidents during previous dispensations arbitrarily allocated money from the President’s Fund to their kith and kin at the expense of the needy on the waiting list.

The JVP-led NPP government has released a list of politicians who have obtained money from the President’s Fund over the years in violation of the terms and conditions governing the provision of relief therefrom. All of them have obtained huge sums of money by leveraging their political connections, and those shameless characters include a tainted politician who fell off an upper-floor balcony of a hotel down under, over a decade ago, while trying to enter an adjoining room a la Spider-Man; he eventually got entangled in a web of lies of his own making.

Embroiled in an academic credentials scandal and unable to make good on its election promises and solve burning issues such as the shortages of rice and coconut and the soaring prices of essentials, the NPP government is all out to divert attention from its failure by carrying out propaganda attacks on the Opposition, which is on the offensive. However, the release of the Swindlers List, as it were, and the police probe into the misuse of the President Fund are most welcome. This has been an unintended benefit of the ongoing propaganda battle between the government and the Opposition.

As for financial assistance from the President’s Fund for patients, one of the conditions stipulated by law is that the family of the patient seeking relief is without adequate financial resources to meet the cost of surgery/treatment. It has also been specified that the monthly income of the family including the patient, spouse and unmarried children should not exceed Rs. 200,000, and a Divisional Secretary should recommend that the person concerned is eligible for financial assistance.

The President’s Fund relief scheme for patients was launched to provide financial assistance to low-income individuals who lack the means to bear the costs of medical treatment or surgery. It is therefore wrong for the President and/or the governing board of the Presidential Fund to grant funds to those who have the wherewithal to afford treatment or surgery either in this country or overseas.

Obviously, politicians who spend colossal amounts of money on their election campaigns and live the high life, residing in palatial houses, moving about in super-luxury vehicles, and travelling the world, are not eligible for financial assistance from the President’s Fund.

The CID is reported to have been called in to investigate the misuse/abuse of the President’s Fund. One cannot but agree with the incumbent government on this score although it is driven by an ulterior motive. One can only hope that the ongoing investigation will reach a successful conclusion, and legal action will be instituted against all those who are responsible for the misappropriation of state funds.

The Swindlers List submitted by the NPP government to Parliament is incomplete; it contains only the names of Opposition politicians. The public has a right to know how all Presidents have misused/abused the President’s Fund since 1978. Are there any individuals connected to the JVP or the NPP among those who have received financial assistance from the President Fund fraudulently, as claimed by Opposition MP Dayasiri Jayasekera, one of those exposed by the government?

Let Minister and Cabinet Spokesman Dr. Nalinda Jayatissa be urged to make public a complete list of beneficiaries of assistance from the President’s Fund instead of releasing names selectively to settle political scores. The NPP government, which is full of self-righteous members, should be able to do so if it has nothing to hide. It is hoped that the Opposition MPs who have not abused their political connections to obtain assistance from the President’s Fund will crank up pressure on the government to do so.

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Editorial

Of that half-open can of worms

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Wednesday 25th December, 2024

The CID has once again proved its selective efficiency and adeptness at doing political work. No sooner had it received a complaint from Justice Minister Harshana Nanayakkara that someone had sought to discredit him by having the title, ‘Dr’, placed before his name on the parliamentary website than it launched an investigation, interrogated the parliament staff and recorded statements, but its probe has apparently come up against a brick wall.

Parliament workers have reportedly informed the CID that the titles given to the NPP MPs on the House website are based on information contained in a letter sent by the office of the Leader of the House, Bimal Ratnayake. What is described as an image of the letter in question is doing the rounds in the digital realm. The government has chosen to remain silent on the letter and the progress in the CID probe, which is bound to open a can of worms for it.

What will the CID do now? Will it grill the staff of the Leader of the House as well? It will be interesting to see what the government’s reaction is. Will the Justice Minister, who thinks there has been a sinister campaign against him, urge the CID to go the whole hog and get to the bottom of it?

Strangely, an official of the Parliament Communication Department apologised to Minister Nanayakkara for what he called an inadvertent data entry error which had led to the placement of ‘Dr’ before Nanayakkara’s name. He issued a statement to that effect when the Opposition raised questions about the academic credentials of the NPP MPs. He owes an explanation to the public.

Minister Nanayakkara, after lodging his complaint with the CID, told the media that he suspected that there was a conspiracy to tarnish his image. Implying the involvement of his political opponents in ‘the conspiracy’, he went on to claim that ‘the dog’ (read the previous dispensation) had been got rid of but there were some ‘fleas’ left, and they too would be dealt with appropriately. He also expressed concern about what he called a counterrevolution.

The Justice Minister has caused a great injustice to man’s best friend. The NPP won elections by condemning the members of the previous government as a bunch of crooks who deserved to be behind bars for their many crimes; they included a politician who lined his pockets at the expense of cancer patients. Now, the Justice Minister likens those characters to canines!

The mention of ‘counterrevolution’ must have sent a chill down the spines of those who are au fait with world history, especially the brutal manner in which some self-proclaimed socialist regimes dealt with ‘counterrevolutionaries’; they resorted to witch-hunts and kangaroo trials which led to the elimination of dissenters. This country is no stranger to savage political violence.

Going by the aforesaid leaked letter, a wag asks whether the office of the Leader of the House has become the cradle of the ‘counterrevolution’ and home to the ‘fleas’ that have left the ‘dog’ in flight.

It defies comprehension why Minister Nanayakkara made a beeline for the CID over the doctorate issue. He should have taken it up with the Speaker and the Secretary General of Parliament and asked for remedial action. That is the proper procedure. Unfortunately, aspersions are now being cast on certain parliament officials.

The NPP parliamentary group has some members who served in previous parliaments and therefore are familiar with parliamentary affairs, and it is incumbent upon them to guide their junior colleagues.

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Editorial

Grim Reaper in overdrive

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Tuesday 24th December, 2024

A sharp increase in fatal road accidents during the past few weeks has jolted the police into inspecting vehicles to check their roadworthiness. As many as 13 lives were lost in road mishaps on Saturday (21). It is believed that many such accidents occur due to the sheer number of unroadworthy vehicles on the road, posing safety risks to motorists, passengers and pedestrians alike. The police must step up inspections and prosecute the drivers and owners of unsafe vehicles.

In 2023, about 2,500 lives were lost in 2,200 road accidents in Sri Lanka, according to the police. Pedestrians accounted for the highest number of road traffic fatalities––more than 740.

Legal action must be instituted against those who issue bogus fitness certificates for unroadworthy vehicles, especially buses and trucks. If the existing laws do not provide for deterrent punishment for them, new ones will have to be introduced as a national priority.

A World Bank (WB) report, Delivering Road Safety in Sri Lanka Leadership Priorities and Initiatives to 2030, provides a number of valuable insights into the deterioration of road safety in Sri Lanka, and spells out what needs to be done to remedy the situation. The following, inter alia, have been identified as the causative factors: an increase in the number of vehicles, poor road maintenance, improper road expansion, less scrutiny in issuing driving licences, ineffectiveness of the authorities in penalising road traffic offences, and inefficiency of public transport system. Citing anecdotal evidence, the report points out that speeding, drunk driving, fatigue, tyre bursts, animal crossing and unprotected level crossings are some other causes of road accidents. The ever-increasing narcotic addiction among drivers of heavy vehicles has also become one of the main causes of road fatalities.

The aforesaid WB report informs us that Sri Lanka will need an additional investment of USD 2 billion to achieve the Sustainable Development Goal (SDG) 3.6 target of a 50% reduction in national road crash fatalities. Given Sri Lanka’s economic crisis, such a huge investment is not within the realm of possibility, but it is a goal that the country must work towards. There are several practicable measures that can be adopted to save lives in the meantime, vehicle inspections being one of them.

Thanks to stern police action, drunk driving menace is believed to have been brought down to a manageable level, but there has emerged another problem—narcotic addiction among bus and truck drivers.

Lanka Private Bus Owners’ Association President Gemunu Wijeratne is on record as having said that 50% bus drivers and conductors are addicted to drugs countrywide. In 2021, then State Minister Dilum Amunugama revealed that 80% of the bus drivers in Colombo and its suburbs worked under the influence of narcotics. A pilot project conducted by the police last year helped nab about 100 drug addicts behind the wheel. Most of them were addicted to crystal methamphetamine popularly known as ICE. This points to the pressing need for random narcotic detection tests to be increased.

The least that can be done to reduce road accidents and save precious lives is to have the police step up operations to nab drug/alcohol addicts behind the wheel, rein in reckless drivers, find unroadworthy vehicles and bust rackets related to the issuance of driving licences and vehicle fitness certificates. That may be the way to make the Grim Reaper, currently in overdrive, downshift and slow down until a comprehensive road safety programme is launched with the participation of all stakeholders to achieve the SDGs.

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