Features

Taxing the taxed

Published

2 years ago

2023/12/25

By Dr Sirimewan Dharmaratne,
Senior Research Officer, HMRC, UK.

Years of laissez-faire attitude towards taxation has finally caught up. Withal lack of sensible fiscal policies, the political phobia of a sensible tax regime has left Sri Lanka facing the quandary of large tax increases, which the public must now acquiesce. Unbridled taxation however will leave deep economic and social scars. This is why it should be approached with caution to prevent a regressive effect on the economy. There are many ways the government could take intelligent, fair, and justified approach to taxation especially at a time of widespread privation. The focus should be on clamping down on tax avoidance and evasion, before considering tax increases.

While the government has taken some meaningful steps, it may have also left the door open for large scale tax avoidance. This is because capital gains from selling shares or dividends are apparently and inexplicably exempt from income tax. High income individuals could be paid in shares, which they could immediately sell and avoid paying income tax. The government cannot allow such avoidance schemes without compunction at a time of a national crisis.

Reducing Tax Evasion – Ghosts and Moonlighters

In tax jargon moonlighters are those who work in second jobs but report income from only one source. Those who just hide in plain sight are tax ‘Ghosts’. Moonlighters pay tax, but their day job, but moonlighting income is likely to be off the books. Those who work primarily on cash basis, operating completely under the tax radar are tax ghosts. These individuals generate a vast amount income that could go completely untaxed. There are a few initiatives that the government could take to capture these individuals in the tax net.

Having a tax record for all those over 18 appears to be step in the right direction. However, this will create unnecessary records without clear benefits. The objective should be to create a record that will yield some tax. These are a few measures that are taken by the UK tax authorities that could be useful for the Sri Lankan Revenue as well.

Employer Database

Require all employers to register with the Revenue. Each employer is given a unique employer reference number and all employees will have their unique TIN. If an employer has 10 employees, there will be 10 records for this employer under the same employer reference, showing the payments paid to each of the ten employees. Every time an employee change employment or engage in more than one employment, each employer has the obligation to supply that information to the Revenue. Therefore, a record is created only when triggered by a potential tax liability. This database will capture all employments. By bring in all SMEs into this network of employers, the tax net could be stretched far and wider.

Finding Unearned Income

Large part of the rental income probably goes untax. Search for a holiday accommodation returns hundreds of properties available all over the country, often for eye-watering rates, especially in Colombo and its purlieu. Most of these properties are likely to be rented out through estate agents. The Revenue should have the authority to contact the agents and require them to submit lists of their clients along with rental incomes. This is much more efficient than approaching each property through the mailbox. Holiday rentals are more than likely to be not occupied throughout the year, but the estate agent would be able to provide accurate assessment of occupation rates and income.

Accredit trades and Services

Requiring that traders belong it an accredited professional body is one way of formalising various trades. Plumbers, electricians, builders, those in health and beauty industry, should all be required to register with a professional body. This body should make sure that members have required qualifications to practice the trade. Although, they will be self-employed sole traders, they will no longer be ghosts as the government will have access to their membership information. Customers should be encouraged to hire only those who are able to show their trade credentials. Traders could be made to accredit by making it illegal to practice a trade without a proper license. More positive incentives can be given through access various government incentive such as training subsidies, favourable credit, import tax concessions, etc.

Contractors

For those individuals who work on contract basis, on demand or on call basis, similar information is obtained through the hiring companies. If a builder or a plumber is hired on a contract basis, then company should be required to provide that information to the Revenue. Especially, for labour providers, which has become commonplace in Sri Lanka, this is a must.

Since they are not regular employers, they should be considered as a different category, but record keeping as far as Revenue is concerned would be similar. An employee in one company may work as a contractor for another. Therefore, different types of income records for the same individual (same TIN) could be compiled in an efficient manner to calculate the total tax liability.

Slipping through the net

Despite all these there will be a large group who will still fall through the tax net. This is a seminal feature in mostly cash-based economies, where even major transactions, like house purchases occur through cash payments. Although income maybe hidden or transactions unrecorded, it is difficult to hide consumption. It is a known economic theory that propensity to consume is similar across similar income groups. Such theories are used by UK tax authorities to determine unreported income. Using various methods and data to match income and consumption, millions of taxpayers have been asked to justify their spending.

Spending Event Triggers

Large spending events or incidences should trigger investigations. In Sri Lanka there is ample opportunity for this. Extravagant functions such as weddings, religious ceremonies, birthday parties are prevalent without any visible income. Then there are all other events where people seem to conjure up money out of thin air. In settling fines, paying bills, making contributions, reporting losses due shady investments or simply reporting burglaries and thefts, very nondescript individuals seem to have fantastic amounts of cash just laying around.

These events should immediately trigger investigations. When unaccounted money is discovered, the Revenue has the first shot at getting the right amount of tax. The question of legality is a matter of indifference to the Revenue. Once that is recovered, all the others, such as banks, creditors and the judiciary could do as they please.

Establish a High-Net-Worth Individual Unit (HNWIU)

Most Sri Lankans have the opinion, probably justified, that very wealthy individuals hardly pay any tax. This has led to widespread discontent and recrimination of government’s tax policies. Therefore, it is important that the public see those who are well-off paying their dues. Once of the initiatives that the UK government has taking is to establish a High-Net-Worth Individual Unit (HNWIU).

This unit exclusively deals with those who apparently have considerable income based on their consumption patterns but not paying tax to commensurate with the lifestyle. This unit should have highly trained professional who are sworn to carry out their duties. The identity of this unit should be available only to the senior managers in the Revenue to protect and maintain their integrity.

Tax Gap – Measure of Evasion

Widespread evasion, sanctioned by politicians and others will only make honest people rogues. Therefore, it is necessary that the public see objective evidence of reduction in tax evasion and not just anecdotes. This is done by measuring the tax gap. Tax gap is the difference between theoretical or the actual amount of tax that should have been collected and the amount that was collected. This can be done by different taxes such as income tax, corporation tax, VAT, etc to see where the gaps are larger and hance more evasion. UK tax authorities calculate the tax gap every year to measure the efficacy of their evasion tackling measures. Tax gap has been brought down from 20% over a few years ago to the current 5%. Calculating the tax gap should be part of plan by the Revenue for modernising taxation in Sri Lanka.

Future of Taxation on Sri Lanka

A strong tax base is a quintessential feature of a vibrant economy. Without it, essential public services and public good cannot be provided. However, taxes should be fair and just. Tax burden should be proportionally distributed based on income. Those who can be easily targeted tax should not get the brunt of the tax burden. Indirect taxes, other than ‘sin taxes’ affect less well-off disproportionally. Feature of a good tax system is to reduce indirect taxes and increase direct taxes.

This can only be achieved by de-coupling the taxation process from politics. An independent tax authority should be established giving vast powers to go after anyone as they deem necessary. Strong tax laws will enable to drastically reduce crime as well. Many famous or infamous people have been indited or jail for tax evasion rather than crimes committed, the latest causality being the US President’s son. While the burden of proof of a crime maybe harder to gather tax evasion is much more straightforward.

Objective evasion measures should be calculated to give more credibility to the tax collection process. Honest tax paying public should be content that it is working fairly for everyone. Focus should be more on direct taxes and not on consumption taxes. Convoluted indirect taxes almost never yield the expected revenue because of simple demand and supply forces. Further, most consumption taxes unfairly affect the poor. If they are implemented, at the least, all basic goods and services should be exempted, and higher rates imposed on luxury goods and services.

A proud nation should be supporting itself and not begging for other people’s tax money while living extravagant and pretentious lifestyles. At the end of the day, one is identified by the country and not by their domestic lifestyle. To outsides all are Sri Lankans and carry that identity everywhere. Unless steps are taken to restore and protect this identity, it will remain confined to the dustbin of failed nations despite empty rhetoric of clueless leaders.

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Features

Proactive peacemaking becomes a paramount need

Published

8 hours ago

2026/06/4

Sahan Weerasooriya

Wasting wars: Some war-displaced people in Lebanon. BBC

It may be some time before the full impact of food inflation is felt in the West. Until such time the world would continue to keep itself in suspense over whether the Trump administration is in earnest when it seeks to convey the impression that it is backing a negotiated solution in West Asia.

As is usually the case, consumer stress would be one of the final determinants of political change. To the degree to which the average US consumer somehow ‘muddles through’ and puts the food on the table, to the same extent would the Republican sections of the US public in particular be tolerant of the Trump administration’s inconsistent handling of the West Asian war and the main issues stemming from it. That is, there would be no grave popular disaffection and a demand for political change in the short term.

However, the indications are that the Trump administration’s support base is suffering some erosion in the wake of the current economic crisis. While reports indicate that Democratic sections are firming-up their opposition to the political centre, Republican support for Trump is also showing signs of waning, we are given to understand.

The above developments are probably why Trump is on record as having given Israeli Prime Minister Benjamin Netanyahu a ‘dressing down’ recently on his seeming intransigence on the question of giving negotiations a chance in West Asia. The show of displeasure could be really aimed by Trump at containing the impatience of the American public.

However, the current ground situation in the Middle East, particularly the uncontained bloodshed, is likely to impress on the thinking sections of the world that more than temporary political change is needed in West Asia and the US.

A well thought out political solution that addresses all the contentious issues at the heart of the Middle East conflict is what enlightened opinion would demand, and very rightly. Right now, the ‘peace efforts’ initiated by the Trump administration give the impression of being piecemeal solutions at best.

There have been, of course, numerous initiatives in the past aimed at bringing permanent peace to the Middle East. These failed mainly because they did not address in full the root causes of the conflict.

At bottom the Middle East conflict is mainly about race and religious hate bred by socio-economic and material inequalities. For instance, if the Palestinian people were not displaced and deprived of land occupied by them at the time of the founding of the Israeli state, ethnic enmities would not have grown to the current unmanageable proportions.

When addressing the above questions, though, it must be remembered that the Israelis too were a displaced people who were entitled to land and a state of their own in the Middle East. Basically, out of these seemingly irreconcilable and conflicting demands have grown the Middle East imbroglio.

Middle East peace is considerably about reconciling these demands and arriving at a solution that would ensure the creation of two states that would opt for peaceful co-existence thereafter.

As long as the US does not see the need for a non-partisan solution that addresses the needs of both ethnicities and religions and goes all-out, as it were, to have it implemented, the Middle East would continue to bleed.

However, staunching the blood flow through the creation of two states would be only half the job done, though a very important part of it. More pernicious, pervasive and difficult to remedy are the inter-ethnic and inter-religious hatreds that have been unleashed over the decades.

However, if substantial, long-lasting peace is to be fostered in the region the latter ‘demons’ would need to be exorcised from the hearts and minds of the communities concerned. No doubt an uphill task but one that must be undertaken by those who wish the region well.

The UN would need to put its ‘best foot forward’ in such undertakings but it is time that it dawned on the international community and other caring quarters that Middle East peace, and all other such uphill challenges, require proactive peacemaking on the part of all civilized sections for their effective management. That is, public involvement in peacemaking too is a must.

Since hatreds are harboured in the human consciousness the enmities embedded in the latter need to be managed and defused judiciously alongside other undertakings in a peace process. In the case of West Asia, such enmities could be even spread globe-wide besides being multi-dimensional. For instance, it ought to be thought-provoking that Iran is insistent on a peace initiative that would also include Lebanon.

Besides security considerations it is also ethnic and religious affiliations that account for Iran making this demand. For instance, the Shias are a numerically important religious community in Lebanon and they provide a significant number of Hizbollah fighters, who are in a vital sense carrying out a ‘proxy war’ for Iran. It also needs to be factored in that Iran is a Shia-majority country.

Thus trans-border religious affiliations could add to the complexities and enormity of ethno-religious conflicts. However, the task of managing centuries-long enmities needs to be launched and prodded on with by peacemakers since a downing of arms alone would not guarantee substantive peace.

It is not realized sufficiently that the process of ending hatreds begins with mutual apologies by antagonists to a conflict for the harm inflicted on each other. This would be anathema in some ears but there is no getting away from the requirement. It is the vital first step to permanent peace anywhere.

In fact there could be no reconciliation worth speaking of without such mutual apologies. It is a point worth re-iterating in these times when even the government of Sri Lanka is voicing the need for national reconciliation. Well, without the words, ‘I am sorry’, there could be no permanent end to enmities – they would do well to remember.

The above requirements may not go down very well with governments, but they resonate in the hearts and minds of most people, since they are inheritors of religious traditions of some kind.

This is a principal reason why peacemaking works well when publics too are involved in them. The effectiveness of such campaigns increases several fold when they have a Mahatma Gandhi or a Jawaharlal Nehru at their helm. A strong proactive involvement by the public in peace could lead to the emergence of such leaders at some point in these campaigns.

Features

Dialog Brings Sri Lanka’s Largest Digital Vesak Experience to Matara

Published

8 hours ago

2026/06/4

Sahan Weerasooriya

From left to right: Hon. Saroja Savithri Paulraj, Hon. Sunil Handunnetti, and Lasantha Theverapperuma experience the Dialog 5G Ultra-powered VR tours.

Official Digital Partner of the 2026 ‘Dakshina Prabha’ National Vesak Zone

Dialog Axiata PLC, Sri Lanka’s #1 connectivity provider, collaborated with the Ministry of Buddha Sasana, Religious and Cultural Affairs to bring one of Sri Lanka’s largest and most technologically advanced Vesak experiences to the ‘Dakshina Prabha’ National Vesak Zone. The three-day celebration, in Matara attracted more than hundred thousand visitors, who engaged with a series of innovative digital activities powered by Dialog 5G Ultra, including Artificial Intelligence (AI) and Virtual Reality (VR) experiences, digital pandols and a Data Dansala. The opening ceremony was attended by Hon. Sunil Handunnetti, Minister of Industry and Entrepreneurship Development and Hon. Saroja Savithri Paulraj, Minister of Women and Child Affairs, along with distinguished guests and Dialog’s senior management.

One of the key attractions at the venue was the Dialog 5G Ultra-powered Virtual Reality (VR) experience, which attracted more than 35,000 participants. The activation enabled devotees to virtually visit and pay homage to sacred Buddhist sites, including the Jaya Sri Maha Bodhi in India and the Atamasthana in Anuradhapura, directly from the Vesak zone in Matara.

Visitors receive complimentary mobile data through Dialog’s QR-powered Data Dansala.

Dialog also conducted an AI Digital Vesak Greeting Card Competition from 21 May to 01 June 2026, attracting numerous entries from across the country. The shortlisted designs were showcased across 20 large LED screens throughout the venue and across Matara City, and were also made available for download via mobile devices. Further, through the use of AI, traditional Jathaka Katha were reimagined in a digital format, demonstrating how technology can be used to preserve and enhance cultural and religious heritage. Together, these initiatives blended traditional Vesak celebrations with emerging technologies, offering visitors a unique and immersive way to engage with Vesak traditions.

Extending the spirit of Vesak through connectivity, Dialog conducted a special Data Dansala powered by its QR Reload platform, enabling visitors to receive complimentary mobile data by scanning QR codes placed across the venue. In addition to the Matara National Vesak Zone, similar Data Dansala activations were also conducted at the Gangaramaya and Bauddhaloka Vesak zones in Colombo.Visitors also had the opportunity to create personalised Vesak-themed digital photos through an AI Photo Booth, generating AI-enhanced portraits using their own photographs and adding a contemporary digital element to the Vesak celebrations.

Visitors watch AI-generated Jathaka Katha

Commenting on the initiative, Hon. Sunil Handunnetti, Minister of Industry and Entrepreneurship Development, said, “The 2026 Dakshina Prabha Vesak Festival marked the first time AI-powered digital innovations were incorporated into a National Vesak Festival in Sri Lanka. Presenting Buddhist stories and teachings through technology created a new and engaging way for visitors to connect with these traditions. We thank Dialog for supporting this initiative and for working closely with us to bring our vision to life. Their contribution played an important role in making this first-of-its-kind event a reality.”

Lasantha Theverapperuma, Group Chief Marketing Officer of Dialog Axiata PLC said, “We thank the Government of Sri Lanka for the opportunity to support the 2026 Dakshina Prabha National Vesak Festival and for embracing technology as part of this year’s celebrations. As the Official Digital Partner, we were privileged to contribute through our Dialog 5G Ultra and AI capabilities, creating new ways for visitors to engage with Vesak traditions while preserving their cultural significance for future generations.”

Beyond supporting the National Vesak Zone in Matara, Dialog also enhanced the Gangaramaya and Bauddhaloka Vesak zones through a range of digital activations during the Vesak season. The company additionally continued its sustainability initiatives, including the Thirasara Aloka Poojawa, which illuminated rural places of worship through solar-powered lighting solutions.

Features

Beauty, elegance and talent…for women

Published

8 hours ago

2026/06/4

Sahan Weerasooriya

Universal Woman is an international pageant focused on “beauty, elegance, and talent” for women, positioning itself as a platform to shape global ambassadors. The 2026 edition will be held in Cambodia, and Sri Lanka will be there, as well.

According to reports coming my way, contestants, at the international event, will work with industry trailblazers, under international standards.

Sri Lankan supermodel, runway and pageant trainer Chulpadmendra Kumarapathirana, is the National Director for Universal Woman Sri Lanka 2026.

With over two decades in the industry, Chula was crowned Miss Sri Lanka 2006, and has since shaped the next generation of titleholders through her Colombo-based Chulpadmendra Catwalk Studio, widely regarded as one of the country’s leading modelling academies.

The team behind Universal Woman Sri Lanka 2026

A former host of Derana Miss Sri Lanka for Miss World 2008 and a judge for Miss Universe Sri Lanka 2025, Chula now serves as National Director for Universal Woman Sri Lanka 2026, leading the franchise’s search for Sri Lanka’s delegate to the international final in Cambodia.

Applications for Universal Woman Sri Lanka 2026 are being taken, via WhatsApp: 077 659 4994, says Chula.

The judging panel for Universal Woman Sri Lanka 2026 includes Senaka De Silva, Pageant Aesthetic Advisor & Chairperson of the Judging Panel, Angela Seneviratne, Caroline Jurie, Rozelle Plunkett, and Suraj Mapa.

Universal Woman Sri Lanka 2026 officially began its journey with a first round of auditions, held in Colombo, marking the start of an exciting new chapter in Sri Lanka’s pageant industry.

Launching the first round of auditions

The platform aims to empower women while selecting an intelligent, confident, and inspiring representative to compete at the Universal Woman International Pageant 2026 in Cambodia, this September.

Universal Woman Sri Lanka now moves forward with the vision of creating one of the country’s most prestigious and empowering pageants while preparing to crown a queen who will proudly represent Sri Lanka on the international stage.