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SHOULD WE BE INFORMANTS TO BOOST TAX REVENUE?

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By Sanjeewa Jayaweera

The headline on page one of the Sunday Island of 07 January 2024 read, “CBSL Governor urges public to become informants to boost tax revenue.” The article was based on an interview with Governor Nandala Weerasinghe (NW) hosted by the President’s Media Centre. NW is quoted to have said, “If the public wants to reduce taxes, in the future, what I see is, while they pay their taxes, they should encourage others to pay taxes or inform the authorities on those who are not paying taxes.” He urges the public to become informants to broaden the tax net, which should reduce direct and indirect taxes. His is a clarion call for the citizens of Sri Lanka to discharge their civic responsibility, which is to pay their taxes and help the authorities to catch those who don’t. His logic can not be faulted, as tax evasion and avoidance is rampant in our country.

Despite a significant degree of displeasure with the government over tax hikes that have resulted in a great deal of hardship for most, there remains a question, at least in my mind, as to how many of the citizens will heed the Governor’s advice.

The question is, what would motivate a person to be an “informant.” While there are numerous reasons for a person to be an informant, in the case of reporting those evading paying taxes, the motive can only be good conscience due to civic duty and the belief that widening the tax net would, as NW states, hopefully, reduce the burden on those who pay their taxes. As far as I am aware, the Inland Revenue Department (IRD) does not offer a financial reward to an informant, although IRD officers receive financial rewards for such collections. Maybe the government should announce a reward scheme for informants.

The two main barriers that, in all probability, will not see too many of us becoming informants would be the significant erosion of civic responsibility among most of our citizens. The concept of doing the right thing by the country is missing in our DNA. Over several decades, our politicians have gotten us used to a regime of low taxes, subsidies, free education and health. There is a general belief that the state must be a provider without much thought regarding how the state can generate the needed funds.

Secondly, many do not see the need to pay taxes because they believe those who govern the country are corrupt. The fact that those responsible for corruption are not investigated and prosecuted for their ill-gotten gains further justifies the decision not to pay taxes. I think this segment of people is not opposed to the concept of paying taxes but refrains from doing so because they do not want to contribute to the fattening of the pockets of politicians.

The Significant Impact of Gotabaya Rajapaksas (GR) Tax Policy

Whilst there is a general belief and acceptance that the hare-brained tax policies of the government of GR contributed significantly to the country’s economic downfall, there is still not much appreciation or understanding of the devastating impact it has had on tax compliance by individuals and businesses.

I have reproduced below the statistics pertaining to the number of taxpayers registered with the IRD from the IRD Performance Reports of 2019 and 2022. The figures as of 31.12.2023 are based on a press conference of the Commissioner of IRD from the Presidential Media Centre as reported in the Sunday Island on 31 December 2023.

As can be seen, a significant number of registered taxpayers left the tax net after 31 December 2019. In my view, even the number of registered taxpayers as of 31 December 2019 was significantly less than it should be, with many not paying their taxes. To have legislation enabling most to leave the tax net is astonishingly negligent and foolish. Trying to re-induct those who exited from the tax net will take a lot of effort.

Value Added Tax (VAT)

The Increase in VAT to 18% from 15% and the imposition of VAT on several items previously exempted from VAT, like fuel, gas, and books, has caused a justifiable degree of anger among the public. In all probability, in terms of President Ranil Wickremesinghes’ chances of getting reelected, it might be the straw that broke the camel’s back.

In 2002, when VAT was first enacted, there were two VAT rates, with certain products and services at 10% and some at 20%. Over the years, the rates increased and decreased, but until the recent change, several essentials were exempt from VAT. The extent of exemptions was such that when I retired from employment about six years ago, nearly 40% of the turnover of supermarkets was from the sale of VAT-exempt items. It is a reflection of the array of products that were purchased by the customers deemed to be essentials that were in the exempt category.

In his interview, the Goveror also warned that some businesses may be engaging in VAT fraud. In countries where VAT works well, all businesses have to issue a VAT Invoice to customers, whether they are tax-paying businesses or members of the public. He stated, “In some places when you buy goods, they ask if you want the invoice without the VAT. If I agree to pay less (for the invoice without taxes), my tax burden will never ease.”

Unfortunately, in our country, the IRD regulates that VAT is not reflected in an invoice issued to members of the public. Most consumers do not even know how much VAT they pay when purchasing an item or service. The supermarket bill or the hospital bill does not show the amount of VAT that was paid.

In 2002, the IRD sent a circular to all companies instructing that VAT charges should not be shown in an invoice/bill issued to a member of the public. When I enquired about the logic of this from the IRD, they replied, “We do not want the consumers to see the amount of VAT they pay as this will make them angry!” This lack of transparency is undoubtedly unfair to the public who are bearing the tax and also contributes to fraud by unscrupulous businesses.

How Many of Us Will Be Informants?

Nandalal Weerasinghe is a public servant whom I admire. He has undoubtedly played a significant role in bringing professionalism to the CBSL Governor’s post and has contributed to somewhat stabilizing the economy. However, I believe his call for taxpayers to be informants will not be heeded, and I believe the government has many other tools to improve tax compliance and increase the collection of tax revenues without having to depend on informants.

The revenue collecting agencies like Customs, Excise, and the IRD are considered to be inefficient and corrupt. The public needs to be told what action is being taken to rectify and eliminate these. As I understand, only when a new bank account is opened will a Tax Identification Number (TIN) be requested. Why can’t the government regulate that all existing bank account holders must submit a TIN certificate to the Bank?

I have read a proposal by Verite Research recommending that the withholding tax (WHT) be increased to 10% from the current 5% on bank interest and that such a measure would boost tax revenue by Rs. 100 billion. It makes perfect sense as WHT is not an additional tax but a mechanism for collecting it in advance. The logic in the proposal is that many who receive bank interest are out of of the tax net.

A few eminently sensible proposals that I came across recently that could assist the tax authorities in monitoring tax compliance and arriving at an estimate of an individual’s income are to reintroduce the QR code system to purchase fuel so that the monthly spend can be monitored and also obtain from Uber and PickMe a list of top customers by spend. Similarly, airport departure cards submitted by Sri Lankans, along with their TIN number (disclosure of which should now be made mandatory), would also be a valuable source of information for tax authorities.

Whilst all these may sound like an invasion of individual freedom, they are all tools that the authorities can use to ensure greater tax compliance by individuals as opposed to depending on informants. The question is whether the government is serious about widening the tax net or is content with seeking more and more taxes from the same group of people who pay their taxes diligently and in full and increasing the contribution from indirect tax.

There needs to be greater debate and criticism on reducing unnecessary state expenditures and how taxpayer money should be spent. The expenditure incurred to maintain over 60 overseas missions, which, incidentally is double what Singapore maintains, is a case in point. Astonishingly, the government is considering incurring Rs 250 million to send a naval ship to the Red Sea to combat the threat to merchant vessel lines by Houthi rebels, joining the big boys to protect the key waterway for global trade.

This task is best left to countries that can afford such expenditure and not to a bankrupt nation like ours where critical life-saving drugs are not available at state hospitals. The logic justifying the expenditure will be as flawed as that given for spending Rs 200 million to celebrate Independence Day.

(The views expressed in the article are solely those of the author and do not necessarily reflect the opinions and views of any organization he may be associated with.)



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Illegal solar push ravages Hambantota elephant habitat: Environmentalist warns of deepening crisis

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Land earmarked for the project

A large-scale move to establish solar power plants in Hambantota has triggered a major environmental and social crisis, with more than 1,000 acres of forest—identified as critical elephant habitat—cleared in violation of the law, environmental activist Sajeewa Chamikara said.

Chamikara, speaking on behalf of the Movement for Land and Agricultural Reform, said that 17 companies have already begun clearing forest land along the boundaries of the Hambantota Elephant Management Reserve. The affected areas include Sanakku Gala, Orukemgala and Kapapu Wewa, which are known to be key elephant habitats and long-used movement corridors.

He said that what is taking place cannot be described as development, but rather as a large-scale destruction of natural ecosystems carried out under the cover of renewable energy expansion.

According to Chamikara, the clearing of forests has been carried out using heavy machinery, while large sections have also been deliberately set on fire to prepare the land for solar installations. He said that electric fences have been erected across wide stretches of land, effectively blocking elephant movement and fragmenting their natural habitat.

“These forests are not empty lands. They are part of a living system that supports wildlife and nearby communities. Once destroyed, they cannot be easily restored,” he said.

The projects in question include a 50 megawatt solar development undertaken by five companies and a larger 150 megawatt project implemented by 12 companies. The larger project is reported to be valued at around 150 million US dollars.

Chamikara stressed that these projects are being carried out in a coordinated manner and involve extensive land clearing on a scale that raises serious environmental concerns.

He further alleged that certain companies had paid about Rs. 14 million to secure support and move ahead with the projects. He said this points to a troubling failure of oversight by state institutions that are expected to protect forests and wildlife habitats.

“This is not only an environmental issue. It is also a serious governance issue. The institutions responsible for protecting these lands have failed in their duty,” he said.

Chamikara pointed out that under the National Environmental Act, any project of this scale must receive prior approval through a proper Environmental Impact Assessment process.

He said that clearing forest land before obtaining such approval is a direct violation of the law.

He added that legal requirements relating to archaeological assessments had also been ignored. Under existing regulations, large-scale land clearing requires prior evaluation to ensure that sites of historical or cultural value are not damaged.

“The law is very clear. You cannot go ahead with projects of this nature without proper approval. What we are seeing is a complete disregard for legal procedure,” Chamikara said.

The environmental impact of these activities is already becoming visible. With their natural habitats destroyed, elephants are increasingly moving into nearby villages in search of food and shelter. This has led to a sharp rise in human-elephant conflict in several areas.

Areas such as Mayurapura, Gonnooruwa, Meegahajandura and Thanamalvila have reported increasing encounters between humans and elephants. According to Chamikara, more than 5,000 farming families in these areas are now facing growing threats to their safety and livelihoods.

 

He warned that farmers are being forced to abandon their lands due to repeated elephant intrusions, while incidents involving damage to crops and property are rising. There have also been increasing reports of injuries and deaths among both humans and elephants.

“This is turning into a serious social and economic problem. When farmers cannot cultivate their lands, it affects food production, income and rural stability,” he said.

Chamikara also raised concerns about the broader environmental consequences of clearing forests for solar power projects. While renewable energy is promoted as a solution to reduce carbon emissions, he said that destroying forests undermines that goal.

“Forests play a key role in absorbing carbon dioxide. When you clear and burn them, you are increasing emissions, not reducing them. That defeats the purpose of promoting solar energy,” he explained.

He added that large-scale deforestation in dry zone areas such as Hambantota could also affect local weather patterns and reduce rainfall, which would have further negative impacts on agriculture and water resources.

Chamikara called for a shift in policy, urging authorities to focus on more sustainable approaches to solar power development. He said that rooftop solar systems on homes, public buildings and commercial establishments should be given priority, as they do not require clearing large areas of land.

He also recommended that solar projects be located on degraded or abandoned lands, such as areas affected by past mining or other low-value lands, rather than forests or productive agricultural areas.

“Renewable energy development must be done in a way that does not destroy the environment. There are better options available if there is proper planning,” he said.

Chamikara urged the Central Environmental Authority and the Department of Wildlife Conservation to take immediate action to stop ongoing land clearing and investigate the projects. He stressed that all activities carried out without proper approval should be halted until legal requirements are met.

He warned that failure to act now would lead to long-term environmental damage that could not be reversed.

“If this continues, we will lose not only forests and wildlife, but also the balance between people and nature that supports rural life. The consequences will be felt for generations,” he said.

The situation in Hambantota is fast emerging as a critical test of whether development goals can be balanced with environmental protection. As pressure grows, the response of authorities in the coming weeks is likely to determine whether the damage can still be contained or whether it will continue to spread unchecked.

By Ifham Nizam

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Why Mahatma Gandhi’s teachings need to be at the heart of conflict resolution

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Mahatma Gandhi

All credit to the Tamil Nadu government for taking concrete measures to perpetuate the memory of the renowned Mahatma Gandhi of India, who on account of his moral teachings stands on par with the likes of Socrates, Plato, Aristotle, Confucius and Jalaluddin Rumi, to name a few such all-time greats. The time is indeed ripe to draw the world’s attention to the Mahatma’s humanistic legacy which has resonated in the hearts of peace-oriented sections the world over down the decades.

Under its mega developmental blueprint titled ‘ Tamil Nadu 2030’, the Tamil Nadu government, among other things, intends transforming villages into centres of economic growth in conformity with the Mahatma’s vision of making the village the fundamental unit of material and spiritual advancement. Thus will come into being the ‘Uttamar Gandhi Model Villages Project’, which will be initially covering 10 village Panchayats. (Please see page 3 of The Island of March 11, 2026).

The timeliness of remembering and appreciating anew the teachings of Mahatma Gandhi resides in the utter lawlessness that has been allowed to overtake the world over the last few decades by none other than those global powers which took it upon themselves to usher in a world political and economic order based on the UN Charter and the Universal Declaration of Human Rights. Mainly in ‘the dock’ in this regard are the permanent members of the UN Security Council.

As is plain to see, the international law and order situation has veered out of control. Principal priorities for the international community or what’s left of it is to prevent the current mainly regional war in the Middle East from degenerating dangerously into another world war, coupled with the task of eliminating the possibility of another nuclear holocaust.

The most scorching of ironies is that the world’s ‘number one power’, the US, has virtually lost its way in the ‘Global Disorder’ it has been party to letting lose. For instance, instead of making good its boast of militarily neutralizing Iran and paving the way for the constant flow of fuel and gas from the Strait of Hormus by itself and Israel, it is now appealing to the rest of the West to come to its assistance. Not surprisingly, US allies are indicating their unwillingness to help pull the US’ ‘chestnuts out of the fire’.

Oil and gas are the veritable life blood of countries and going ahead it should not come as a surprise if impatience gets the better of the major powers and the nuclear option is resorted to by some of them under the dangerous illusion that it would be a quick-fix to their growing economic ills and frustrations.

All the above and more are within the realms of the possible and the need is pressing for humanistic voices to take centre stage in the present runaway crisis. As pointed out in this column last week, Realpolitik has overtaken the world and unless the latter is convinced of the self-destructive nature of the major powers’ policy of ‘meeting fire with fire’ to resolve their disputes, annihilation could be the lot of a good part of the world.

For far too long the voice of humanity has been muted and silenced in the affairs of world by the incendiary threats and counter-threats of the big powers and their allies. No quarter has been bold enough in these blood pressure-hiking slanging matches to speak of the need for brotherly love and compassion among nations and countries. But it’s the language of love and understanding that is the most pressing need currently and the Mahatma in his time did just that against mighty odds.

At present the US and Iran are trading threats and accusations over military-related developments in the Gulf and it’s anybody’s guess as to what turn these events will take. However, calming voices of humanity and moderation would help in deescalating tensions and such voices need to go to the assistance of the UN chief and his team.

The Mahatma used the technique of ‘Satyagraha’ or the policy of non-violent resistance to oppose and dis-empower to a degree the British empire in his time and the current major powers would do well to take a leaf from Gandhi. The latter also integrated into the strategy of non-violent resistance the policy of ‘Ahimsa’ or love and understanding which helped greatly in uniting rather than alienating adversaries. The language of love, it has been proved, speaks to the hearts and minds of people and has a profoundly healing impact.

Mahatma Gandhi defined the ideal of ‘Ahimsa’ thus: ‘In its positive form, “Ahimsa” means the largest love, the greatest charity. If I am a follower of “Ahimsa”, I must love my enemy or a stranger to me as I would my wrong-doing father or son. This active “Ahimsa” necessarily includes truth and fearlessness.’ (See; ‘Modern Indian Political Thought; Text and Context’ by Bidyut Chakrabarty and Rajendra Kumar Pandey, Sage Publications India, Pvt. Ltd., www.sagepub.in).

In the latter publication, the authors also defined the essence of ‘satyagraha’ as ‘protest without rancour’ and this is seen as ‘holding the key to his entire campaign’ of non-violent resistance. From these perspectives, the teaching, ‘hatred begets hatred’ acquires more salience and meaning.

Accordingly, the voice of reason and love needs to come centre stage and take charge of current international political discourse. The UN and allied organizations which advocate conflict resolution by peaceful means need to get together and ensure that their voices are clearly heard and understood. The global South could help in this process by seeing to the vibrant rejuvenation of organizations such as the Non-aligned Movement.

An immediate task for the peace-oriented and well meaning is to make the above projects happen fast. In the process they should underscore afresh the profound importance of the teachings of Mahatma Gandhi, who is acclaimed the world over as a uniting and healing political personality and prophet of peace.

If the Mahatma is universally acclaimed, the reason is plain to see. Put simply, he spoke to the hearts and minds of people everywhere, regardless of man-made barriers. The language of peace and brotherhood, that is, is understood by everyone. The world needs more prophets of peace and reconciliation of the likes of the Mahatma to drown out the voices of discord and war-mongering and ensure that the language of humanity prevails.

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Exciting scene awaits them …

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The Future Model Hunt extravaganza, organised by Rukmal Senanayake, and advocacy trainer Tharaka Gurukanda, held in late January 2026, has brought into the limelight four outstanding contestants who will participate, at the international level, this year – Sandeepa Sewmini, Demitha Jayawardhana, Diwyanjana Senevirathna, and Nimesha Premachandra.

Nimesha took the honours as Mrs. Tourism Sri Lanka 2026 and was featured in The Island of 05th March,

Sandeepa Sewmini was crowned Miss Supranational 2026 and will represent Sri Lanka at the big event to be held in Poland later in the year.

A Business Management and Human Resources student, she will be competing under the guidance of Rukmal Senanayake from the Model With Ruki – Model Academy & Agency.

The Mister Supranational Sri Lanka crown went to Demitha Jayawardhana, a 20-year-old professional model and motocross rider.

Apart from modelling he is engaged in his family business.

Demitha Jayawardhana: Mister Supranational Sri Lanka 2026

Demitha is also a badminton player with a strong passion for sports, fitness and personal growth.

In fact, he is recognised for his strength, discipline, and passion for fitness.

A past student of Wycherley International School and St Peter’s College, Colombo, Demitha is currently in his second year of Economics Management at the Royal Institute of Colombo.

He will represent Sri Lanka at the 10th edition of the Mister Supranational pageant, in Poland, in August, 2026.

Mister and Miss Supranational are annual international beauty pageants, held in Poland, and are designed to discover new talent for the modelling and television industries and produce instant celebrities.

The competition focuses on elegance, intelligence, and social advocacy, with contestants, representing their countries.

The newly appointed Miss Teen International Sri Lanka 2026 is Diwyanjana Senevirathna.

She was crowned at the Future Model Hunt and will represent Sri Lanka at the Miss Teen International 2026 pageant in India.

Diwyanjana is noted for her grace and dedication to representing the country at this prestigious event that aims to celebrate talent, intelligence, charm, and individuality, and provide a platform for young girls to showcase their skills.

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