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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

Selective transparency

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Saturday 27th December, 2025

The NPP government has released a cordial diplomatic letter from Indian Prime Minister Narendra Modi to President Anura Kumara Dissanayake, and gained a great deal of publicity for it as part of a propaganda campaign to boost Dissanayake’s image. Such moves are not uncommon in politics, especially in the developing world, where the heads of powerful states are deified and their visits, invitations and letters are flaunted as achievements of the leaders of smaller nations. However, the release of PM Modi’s letter to President Dissanayake is counterproductive, for it makes one wonder why the government has not made public the MoUs it has signed with India?

PM Modi’s Sri Lanka visit in April 2025 saw the signing of seven MoUs (or pacts as claimed in some quarters) between New Delhi and Colombo. Prominent among them are the MoUs/pacts on the implementation of HVDC (High-Voltage Direct Current) Interconnection for import/export of power, cooperation among the governments of India, Sri Lanka, and the United Arab Emirates on developing Trincomalee as an energy hub, and defence cooperation between India and Sri Lanka.

The NPP government has violated one of the fundamental tenets of good governance––transparency; there has been no transparency about the aforesaid MoUs or pacts, especially the one on defence cooperation. They cannot be disclosed without India’s consent, the government has said. This is a very lame excuse. The JVP/NPP seems to have a very low opinion of the intelligence of the public, who made its meteoric rise to power.

When the JVP/NPP was in opposition, it would flay the previous governments for signing vital MoUs and pacts without transparency. But it has kept even Parliament in the dark about the MoUs/pacts in question.

Ironically, the JVP, which resorted to mindless violence in a bid to scuttle the signing of the Indo-Lanka Accord in 1987, has sought to justify the inking of an MoU/pact on defence cooperation between Sri Lanka and India and keeping it under wraps, about three and a half decades later. The signing of that particular defence MoU/pact marked the JVP’s biggest-ever Machiavellian U-turn. How would the JVP have reacted if a previous government had entered into MoUs with India and kept them secret? It opposed the proposed Economic and Technology Cooperation Agreement (ETCA) between Sri Lanka and India tooth and nail, didn’t it?

Whenever one sees the aforesaid letter doing the rounds in the digital space, one remembers the MoUs/pacts shrouded in secrecy, which have exposed the pusillanimity of the NPP government, whose leaders cannot so much as disclose their contents without India’s consent.

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Editorial

Desperate political sandbagging

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Friday 26th December, 2025

There is nothing more predictable than surprise in politics. After securing a two-thirds majority in Parliament last year and emerging victorious in most local councils, this year, the JVP-led NPP may have thought that it was plain sailing. But the government now has many unforeseen, seemingly intractable issues to contend with almost on all fronts. The disaster-stricken economy is expected to slow down, with relief and rebuilding costs escalating, and the deadline for the resumption of debt repayment approaching. Vehicle imports are bound to decrease, causing a sharp drop in the government’s tax revenue. The rupee is depreciating fast. As if these were not enough, the government is experiencing serious problems on the political front.

The defeat of the NPP’s budget in the Colombo Municipal Council (CMC), which the JVP/NPP seized control of through extensive horse trading, could not have come at a worse time for the government. The same fate has befallen many other NPP-controlled local councils. Most of all, the NPP has suffered a string of defeats in the cooperative society elections countrywide during the last several months.

Desperate times are said to call for desperate measures. Cyclone Ditwah and the attendant extreme weather events that badly damaged roads, tank bunds and river banks prompted repair teams to resort to sandbag revetment. But there have been many instances where sandbag facings collapsed, unable to withstand the intensity of floods and slope failures. The government politicians who boasted of having carried out swift restoration work have been left red-faced; they have failed to assess the severity of the problems they are trying to solve.

The NPP government has resorted to a method similar to sandbag revetment in a desperate bid to consolidate its control over some local councils which cannot secure the passage of their budgets for want of majorities. Its members have gone to the extent of setting the clock forward in such institutions, meeting in advance of the regular start time and declaring their budgets passed before the arrival of the Opposition councillors. What the NPP did in the Horana Urban Council the other day is a case in point, the Opposition says.

The NPP is accused of having inflated the number of votes for its Galle MC budget amidst a howl of protests from the Opposition and declared victory. The Opposition councillors prevented the council secretary from leaving the auditorium, put the budget to a fresh vote and defeated it. The Opposition has threatened legal action against the Mayors/Chairpersons and the state officials for violating the law. The government is likely to employ a similar method to have the CMC budget passed when it is put to a vote again next week. The JVP has no sense of shame, just like all other political parties that have been in power.

All self-righteous politicians, given to moral grandstanding, lay bare their true faces when their interests are threatened, and they face the prospect of losing their hold on power. The JVP/NPP is now without any right to be critical of its rivals who did not scruple to undermine democratic principles and traditions to retain power.

Gaining control of hung local councils is one thing, but running them to the satisfaction of their members and the public is quite another. The non-majority councils that the Opposition parties have gained control of could face the same fate as the CMC. This situation has come about because the country is without patriotic leaders. Ideally, the political parties that obtained pluralities in the hung councils should have been allowed to control those institutions, and they should have adopted a conciliatory approach and sought their political rivals’ cooperation to serve the public.

The shameful manner in which the NPP acted during the Galle MC budget vote is not unprecedented. One may recall that in January 2024, the SLPP-UNP government did something similar to secure the passage of its despicable Online Safety Bill. The then Speaker Mahinda Yapa Abeywardena stooped so low as to make use of a brawl in the House and declare the Bill passed. Interestingly, the SLPP and the UNP are among those who are raking the NPP over the coals for undermining democratic principles and traditions. So much for the self-proclaimed messiahs and their critics.

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Editorial

Christmas spirit, relief and pledges

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Thursday 25th December, 2025

Christmas has dawned while Sri Lanka is reeling from the cumulative impact of multiple disasters which snuffed out hundreds of lives and destroyed many homes and livelihoods. It is a time of hope. Its ethos, which emphasises hope, compassion and giving, could not be more relevant in these difficult times when the task of looking after a large number of disaster victims and helping rebuild their shattered lives has become a top national priority.

Santa came here the other day, as it were. There was no magical flight of a sleigh pulled by reindeer across the night sky. Instead, a jet landed at the BIA, and out stepped Indian External Affairs Minister S. Jaishankar. He unveiled a generous disaster relief and reconstruction package from India and flew back. This noble act of giving exemplifies the spirit of Christmas as much as good neighbourliness.

The best way the Sri Lankan rulers can show appreciation for generous assistance from India and other nations is to uphold accountability, rationalise disaster relief and ensure that it is distributed in a transparent manner. There are disturbing reports about political interference with the disbursement of funds among disaster victims. A high-level probe must be conducted into these allegations.

Christmas is also the season of giving and forgiving. The irony of Minister Jaishankar meeting President Anura Kumara Dissanayake, who is also the leader of the JVP, may not have been lost on keen political observers. If the JVP had acted wisely, heeding religious tenets, and pursued its political goals without resorting to violence, in the late 1980s, tens of thousands of precious lives and state assets worth billions of rupees could have been spared. India has forgiven the JVP, which it even helped gain international legitimacy and shore up its electoral chances in the run-up to last year’s presidential election. India has also helped Sri Lanka manage its worst-ever economic crisis and the impact of natural disasters. The people of Sri Lanka have also forgiven the JVP, despite its past violence, as evident from its impressive electoral victories last year. Sadly, the JVP is not willing to forgive its political enemies. Its General Secretary Tilvin Silva himself has said so. It ought to soften its stand.

All political leaders in this country usually issue well-written Christmas messages, extolling the core Christian virtues, such as giving, forgiving, compassion and peace-making. If only they lived up to the ideals they claim to cherish, at least while the country is struggling to recover from a series of natural disasters. Unfortunately, their post-disaster political battles are intensifying apace, and one wonders whether their focus is actually on helping disaster victims or furthering their political interests. They are not willing to sink their political differences for the sake of the disaster victims crying out for relief.

Meanwhile, the government leaders ought to go beyond issuing Christmas messages if they are to prove that they actually care about the believers in Jesus Christ. They ought to fulfil their pledge to serve justice for the victims of the Easter Sunday terror attacks (2019), which claimed more than 275 lives.

About seven years have elapsed since that tragedy which could have been prevented if the then government had heeded intelligence warnings, and the country has had four Presidents and three governments. But the promises made by the political leaders to bring the masterminds behind the Easter Sunday carnage to justice have gone unfulfilled. Those who are desperately seeking justice pinned their hopes on the current leaders who vowed to trace and prosecute the terror masterminds expeditiously.

The present-day leaders, too, have chosen to remain silent on their promise at issue; they are impervious to calls for justice, just like their predecessors. Let fulfilling their pledge to serve justice for the Easter Sunday terror victims be one of their Christmas resolutions.

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