Sumanthiran says regular tax amnesties only encourage more people to evade 

Provisions of the Finance Bill would be detrimental to the country, TNA MP M.A. Sumanthiran told Parliament yesterday, calling on the government not to pass the Bill.

 Participating in the debate on the Finance Bill, the TNA MP said, “For the first time in the history of this country, we have tax amnesty being declared through a legislation titled Finance Act. Previously, those Bills said were quite open, they were called Tax Amnesty Bill, or Inland Revenue amendments, but here some important issues as to what the objective of this Act, I say is being covered up by the title of the Act which is Finance Act”, he said.

MP Sumanthiran observed that the amnesty that was being granted was not the first time, not the second time, not the third time, from the 1960s several times amnesties had been granted.

“This matter was discussed at length in the public finance committee of Parliament, and all senior officials, I am sure many of them are here in the box today, repeatedly said that they concede that you must not do it from time to time, amnesties must never be given from time to time. It must be a one off, and that’s it. Because once the country gets used to, the fact that after a few years another opportunity will arise for amnesty that encourages people to make money and not declare it. You might bring them into the tax net. That’s a second justification that is made for tax amnesty, but the primary problem that we have in this country is that we don’t have a proper mechanism to collect our revenue, now that is conceded by everybody, so without fixing that problem, there is no point.

“I will get on to the two important issues, one is that, in section 7 of this Act, there is secrecy, now this is what we pointed out in court as well, where it said absolute secrecy and later official secrecy, fortunately in the Supreme Court the Attorney General said they will change the wording to absolute secrecy to official secrecy but nevertheless the concern remains. Once you have this provision then how that person came by that money, came by that taxable supply can never be gone into and although the speaker from the government ranks, who preceded me, said that terrorist financing, money laundering all of that is exempt from this, yes, it says it is exempt from this, but money earned through those processes can be brought in and you cannot go after that person on that account, and all you have to do is under section 5 is deposit in an account. You can take it out the next day, the justification is that the money is coming into circulation, but it doesn’t prescribe a minimum period for which the money must remain or invest in a property. You can invest in a property and sell it the next day. So this is not a desirable provision that is being made, the tax commission report of 2009 has recommended to the government not to do this, that this doesn’t bring in the desired results, the Chairman of the Commission is the present Governor of the Central bank, so I say, urge the Minister to abandon this process that is called a tax amnesty, country will lose, according to revenue officers’ trade union who have publicly said, which has not been counted that 300 billion loss will be incurred by the country as a result of this act and no government official has still counted that.”