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COPA baffled by massive rewards for Customs at the expense of Treasury

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Question mark over Tax Appeals Commission

70% of fine on Lanka Coal ends up with officers

By Shamindra Ferdinando

The cash-strapped government hasn’t been able to recover tax revenue running into billions of rupees, in spite of sporadic interventions made by the Parliamentary Watchdog, the Committee on Public Accounts (COPA).

 According to a report submitted to Parliament on July 20 by COPA, the situation has been further complicated by the Customs receiving substantial amounts, as rewards, from fines imposed on tax defaulters, at the expense of the Treasury.

 Prof. Tissa Vitarana, in his capacity as the Chairperson of the 22-member COPA, has submitted the report.

 The COPA has questioned the Customs why prominent palm oil importers Pyramid Wilma Pvt Ltd and Naratha Agro Industries (Pvt) Ltd. were allowed to appeal in 2019 against the Attorney General’s decision that loss of revenue suffered by the Treasury to the tune of Rs 6.130 bn during 2013-2016 period should be charged from 2013 instead of 2016 as recommended by a committee that inquired into the irregularities.

Pointing out that the Tax Appeals Commission couldn’t accept appeals made after the stipulated 3 month period following a particular decision, COPA has instructed Director General of Customs, Maj. Gen (retd) Vijitha Ravipriya to inform the Tax Appeal Commission. DG, Customs has done so on Feb 2, 2021, COPA according a copy of the report made available to The Island.

 Tax Appeals Commission has been established in terms of Tax Appeals Commission Act No 23 of 2011 (subsequently amended).

 COPA has also dealt with an unprecedented case of Sri Lanka Ports Authority (SLPA) and Customs being involved in a costly case wherein the latter was seeking 50 percent of a fine imposed on SLPA as a reward for those involved in the inquiry. According to COPA proceedings, the SLPA had been blamed for defaulting on the payment of Rs 916,526 over the import of gantry cranes and other equipment worth Rs 11,498,829,084 way back in 2011.

 In spite of talks involving stakeholders, including the Treasury as well as the House watchdog over the years, the issue hadn’t been resolved as both parties spent quiet a lot on lawyers.

 Customs have sought a staggering 50 percent as a reward for officers from the fine imposed on the SLPA. The Consultative Committee on ports and shipping has inquired into the possibility of the Treasury taking the entire sum.

 COPA has questioned the rationale in one government institution receiving cash reward at the expense of another as it caused quite a problem. According to the COPA report made available to The Island, the watchdog has requested Chief Accounting Officer/Accounting Officer to send all relevant reports and documents to parliament before the Customs appeared before Prof. Vitharana’s outfit in two months.

 Prof. Tissa Vitharana told The Island that remedial measures should be taken to improve the revenue collection process. Appreciating the services rendered by members of his committee, the political veteran said that the need to enhance state revenue couldn’t be ignored. The LSSPer noted that the government income had now fallen very much less than 10 percent of the GDP, a situation all should be seriously concerned about.

 COPA has examined the legal wrangle involving the Customs and the SLPA against the backdrop of Customs officers receiving half of Rs 205 mn imposed on Lanka Coal Company (Pvt) Ltd as rewards due to the payment being categorized as a fine instead of an additional tax. The company in question has been formed by CEB (60%), Treasury (20%), Ceylon Shipping Corporation (10%) and SLPA (10%). COPA pointed out that in addition to taking 50 % of the so called fine, Customs had secured a further 20% (Rs 41 mn) for their welfare and management fund leaving Rs 61.5 for the Treasury.

 COPA has underscored the need to amend relevant laws to prevent recurrence of such irregularities.

 COPA has revealed a spate of instances wherein due to range of factors, including raging Covid-19 epidemic had been blamed on the inordinate delay in settling a substantial number of tax appeals. The tax and penalties pertaining to 1,108 appeals amounted to a staggering Rs 18,684,603,316 whereas only 49 were finalized.

 

 



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Inter-provincial travel ban to be lifted on Oct. 31

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Flagrant violations largely ignored during restrictions

ECONOMYNEXT – The ongoing inter-provincial travel ban will be lifted on October 31, the national COVID-19 prevention task force said, despite social media accounts – and sometimes pictures – of people openly flouting the ban.

The restriction was imposed in conjunction with an island-wide lockdown, officially known as a quarantine curfew, that the government declared on August 20 amid a surge in COVID-19 cases.

Despite the lockdown being relaxed on October 01 as cases began to drop, the inter-province travel restriction has remained, at least on paper.

Critics, however, claim that people have been traveling – some even going on trips – around the country blatantly ignoring the ban, despite President Gotabaya Rajapaksa ordering the authorities to strictly enforce it from October 21.

“After a discussion among the task force on Friday (23), with the permission of the president, it was decided to lift the travel ban from 4am October 31,” Army Commander Gen Shavendra Silva told reporters on Friday.

Silva, who heads the national COVID-19 task force, said all public transportation services will also restart on October 25 and will operate according to health guidelines.

Health officials have joined the chorus of voices lamenting the apparent lax nature of the inter-provincial travel ban. The public does not seem to follow health guidelines increasing the risk of another wave of the epidemic, they have said.

“The behaviour of the public is not satisfactory,” Health Promotion Bureau Director Dr Ranjith Batuwanthudawa told the privately owned Derana network in an interview.

“The public did not follow the guidelines in the first long weekend after restrictions were relaxed. It can again increase the number of patients to a level the health sector cannot cope with,” he warned.

Meanwhile, Gen Silva said the Pfizer-BioNTech COVID-19 vaccine will be administered as a booster dose for frontline workers in the health, military, police and tourism sectors starting November 01.

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North, East see highest attendance of students, teachers: Dinesh

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ECONOMYNEXT – Northern and Eastern provinces saw the highest attendance of students, teachers, and principals when schools were reopened for the first time in six months, Education Minister Dinesh Gunawardena told parliament on Friday (22).

Classes from grades 1 to 5 recommenced at 5,059 schools with fewer than 200 students on Thursday (21) amid an ongoing strike by teachers’ trade unions which is set to finally end next Monday (25).

Minister Gunawardena said the government was able to open around 98 percent of the targeted schools.

“Sixteen percent of students attended schools across the country, while 26 percent of teachers who signed their attendance,” Minister Gunawardena told parliament.

Principals showed up to work at 69 percent of schools with fewer than 200 students, in the island’s north, while 52 percent of teachers and 21 percent of students were present on Thursday, he said.

In the Eastern province, 67 percent of principals, 45 percent of teachers, and 39 percent of students went back to school on Thursday, he added.

In contrast, schools in the Southern and Western provinces saw lower levels of attendance from principals, teachers, and students, the minister said.

“We believe everyone will support the reopening of schools without any party or colour difference,” Minister Gunawardena said.

Trade unions are not fully onboard the government’s proposed solution to their long-standing grievance of salary anomalies.

The three-month-long strike, one of the longest trade union campaigns in Sri Lanka’s history, has deprived students of their only mode of distance learning in pandemic times: online education.

It is still uncertain if all principals will report to duty on Monday as some principals’ trade unions have said some of their demands including car permits and a mobile phone allowance have not been addressed yet.

School teachers and principals in Sri Lanka were on strike for the 99th day running on October 15 when they said they would start work from October 25.

The government proposed to increase their salaries in a four-year strategy, but upon the rejection of that proposal, the government later proposed to give the increments in two installments. The unions rejected this, too, and continued the strike, demanding that their salaries be increased in one go.

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Foreign Minister to launch Lanka-UK chamber of commerce in London

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by Sujeeva Nivunhella
reporting from London

Foreign Minister Prof G. L. Peiris is scheduled to be in London this week starting from tomorrow (25) for a series of events including the launching the Sri Lanka-UK Chamber of Commerce, diplomatic sources said

During his stay in London from Monday to Thursday (28), Prof Peiris is to meet his UK counterpart Secretary of State for Foreign, Commonwealth and Development Affairs and Minister for Women and Equalities, Elizabeth Truss and Members of the Houses of Parliament and Lord Naseby.

Sources said that it would be Prof Peiris’ first visit to London after assuming the duties as the Minister of Foreign Affairs.

The launch of the Sri Lanka – United Kingdom Chamber of Commerce is scheduled to be presided over by HSBC bank. Lord Davies of Abersoch, the UK Prime Minister’s Trade Envoy to Sri Lanka and a host of invitees including the representatives of the London Stock Exchange and De La Rue. The new Chamber is to be registered with both British Chamber of Commerce and the UK Companies House.

Prof Peiris is expected to complete his London visit on Thursday (28) and then to proceed to Glasgow to attend the UN Climate Change Conference (COP26) which is scheduled to begin next Sunday (31).

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