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Govt. MP slams Finance Ministry over gaping holes in tax collection system

‘New taxes won’t help as long as system remains the same’
By Shamindra Ferdinando
SLPP MP Mahindananda Aluthgamage yesterday (30) said that in spite of him repeatedly raising the urgent need to regulate chartered accountants, as part of the overall measures to increase state revenue, nothing was being done.The former minister alleged that the Finance Ministry was turning a blind eye to a well-organized racket that deprived the cash-strapped government much needed revenue.
Lawmaker Aluthgamage said so in response to The Island queries. Demanding an explanation from the Finance Ministry, regarding its failure to regulate chartered accountants, regardless of evidence of unscrupulous activities by some of them, like certifying doctored accounts, the Kandy District MP said that the government wanted to streamline the revenue collection process.
The government wouldn’t be able to benefit from new and increased taxes as long as the revenue collection system remained in the hands of corrupt elements, the Minister said. The former minister asked whether the continuing failure to recover well over Rs 700 bn, in unpaid taxes, accumulated interest et al, could be justified under any circumstances.
The former minister said the Finance Ministry was yet to respond to accusations he made in Parliament, on Sept. 20, about large-scale tax evasion and the role played by some chartered accountants/tax consultants in the racket.It was common knowledge that when a tax return was submitted, through a firm of chartered accountants, the Inland Revenue officers hardly asked any questions, MP Aluthgamage said.
Aluthgamage added that he expected the Finance Ministry and other relevant institutions to get in touch with him. “However, they hadn’t contacted me, though the Finance Ministry, on Sept. 26, assured that the Parliament would be briefed on the developments and action taken, as regards the accusations, within a month,” the MP said.
The MP said that he wouldn’t withdraw the accusations he made in Parliament, on Sept. 20, under any circumstances. The Finance Ministry should either prove me wrong or take remedial measures as soon as possible, the MP said, urging the powers that be to address the issues at hand, or face the consequences.
Referring to what he called two glaring cases of tax evasion, involving prominent businessmen, MP Aluthgamage said that the Finance Ministry should go the whole hog. The situation was so bad the government couldn’t ignore the urgent need for overall reforming of the tax collecting structure, the ex-minister said. Reiterating the pivotal importance in regulating chartered accountants, lawmaker Aluthgamage revealed an instance of Rs 35 bn was shown as Rs 5 bn.
President Ranil Wickremesinghe holds the finance portfolios whereas Ranjith Siyambalapitiya and Shehan Semasinghe serve as State Finance Ministers. SLFPer Siyambalapitiya is responsible for revenue collection.
State Minister Siyambalapitiya, on Sept. 26, requested a comprehensive report from the Customs, Inland Revenue Department and Excise Department as regards the issues raised by MP Aluthgamage, in terms of Standing Orders (27) 2. Requesting them to submit their report, within two weeks, MP Siyambalapitiya assured that the Parliament would be briefed, within a month. Instructions were issued at a meeting chaired by State Minister Siyambalapitiya, at the Finance Ministry. Among those present were Inland Revenue chief D.R.S. Hapuaarachchi, Director General, Customs, P.B.S.C. Nonis and Commissioner General, Excise, M.J. Gunasiri.
Referring to the staff-level agreement Sri Lanka reached with the International Monetary Fund (IMF), MP Aluthgamage said that the government was taking measures to enhance revenue. The Parliament endorsed ‘Social Security Contribution Levy’, on Sept. 08, with 91 members voting for and 10 against, the former minister said, adding that it was meant to annually collect Rs 140 bn. “Taxes are necessary. All of us understand the difficulties experienced by vast majority of people, struggling to make ends meet. Indirect taxes are imposed on them, whereas those who should pay taxes, continue to evade the taxman,” MP Aluthgamage said.
MP Aluthgamage said that the current tax appeal system should be examined as interested parties continued to exploit the loopholes for their advantage. The former minister said that the reports released by parliamentary watchdog committees, COPE (Committee on Public Enterprises), COPA (Committee on Public Accounts) and COPF (Committee on Public Finance), since the last general election, revealed how the government deprived itself of the revenue by allowing interested parties to exploit the tax collection system.
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The sun will be directly overhead Colombo, Awissawella, Talawakelle, Dimbula, Galakumbura and Dambagalla at about 12:12 noon today [07]

On the apparent northward relative motion of the sun, it is going to be directly over the latitudes of Sri Lanka during 05th to 14th of April in this year.
The nearest areas of Sri Lanka over which the sun is overhead today (07th) are Colombo, Awissawella, Talawakelle, Dimbula, Galakumbura and Dambagalla at about 12:12 noon.
News
MoU on Defence a significant new addition to Ranil-Modi consensus

Defence Secy says a decision was taken at 2023 Defence Dialogue
Contrary to claims that the MoU/agreements finalised during Indian Prime Minister Narendra Modi’s state visit here were in accordance with an understanding between former President Ranil Wickremesinghe and PM Modi in July 21, 2023, the MoU on Defence Cooperation is a new addition.
A joint statement issued on July 21, 2023, soon after the conclusion of Wickremesinghe’s visit, didn’t refer to an MoU on defence cooperation.
Premier Modi disclosed the decision to enter into an MoU on 16 Dec., 2024 at a joint press conference addressed by him and President Anura Kumara Dissanayake.
A media statement issued by the Indian High Commission in Colombo quoted the Indian PM as having said that President Dissanayake and he had agreed that the two countries’ security interests were interconnected. “We have decided to quickly finalise the Security Cooperation Agreement.”
President Dissanayake, in his address, didn’t refer to the proposed MoU on defence cooperation. The Presidential Media Division quoted President Dissanayake as having said that they exchanged views on cooperation in the fields of defence and security, power and energy, training and capacity building, education, agriculture and social security.
However, retired Air Vice Marshal Sampath Thuyakonttha, who signed the MoU on Defence Cooperation, in his capacity as the Defence Secretary, said that they had agreed to strengthen defence relations through an MoU during Defence Dialogue in 2023.
Responding to concerns expressed in some quarters about the MoU at issue, Thuyakonttha, a veteran Mi 24 helicopter gunship pilot, emphasised that the agreement on the MoU had been reached in keeping with the instructions issued by the Secretary to the President in January this year.
In addition to the MoU on Defence Cooperation, the two sides finalised six other MoUs/agreements. They dealt with Implementation of HDVC interconnection for import/export of power, cooperation in the field of sharing successful digital solutions implemented at population scale for digital transformation, multi-sectoral grant assistance for Eastern Province, cooperation in the field of health, medicine, etc.
India, Sri Lanka and UAE have agreed to develop Trincomalee as an energy hub.
Milinda Moragoda, who served as Sri Lanka’s High Commissioner in New Delhi during the August 2021-Oct 2023 period and played a critical role in negotiations, stressed the pivotal importance of going ahead with the MoU/agreements.
In response to The Island queries regarding the latest developments, Moragoda said that the progress made on the economic integration and connectivity side was extremely encouraging. Especially, the concrete steps taken to establish connectivity in power, petroleum and the development of Trincomalee as an energy hub, he said.
“The fact that trilateral cooperation between India, Sri Lanka and selected third countries will become part of our future development strategy, with the formal entry of the UAE as a partner in the Trincomalee energy hub initiative is a very important step forward.”
Moragoda said: “The establishment of a framework to share successful digital solutions between India and Sri Lanka is also another positive development.
“It is critical that both parties now focus on the speedy implementation of all the agreements that have been reached.
“Future consideration should be given to developing road and rail connectivity as well.
“We should all understand and absorb that the physical connectivity that would be established in power, petroleum and other sectors will link us directly to India, the Middle East and Europe making us potentially a key global hub at a pivotal point in world history.
“The understandings that have been reached with India could become critical for Sri Lanka’s immediate economic survival and development as we cope with the monumental disruptions taking place in the international economic environment and geopolitical sphere at the moment.
“Sri Lanka is in an extremely vulnerable position and will have to very quickly work out a survival strategy through which we can diversify our foreign income and investment sources while arriving at an understanding with the US in the short term.
“As we enter an era where geoeconomics will become more important than plain economics, the agreements reached during the visit of Prime Minister Modi could help lay an initial foundation for Sri Lanka’s future developmental direction.”
By Shamindra Ferdinando
News
Harsha says govt. grabbed credit for what he initiated

Dambulla cold storage facility:
SJB Colombo District MP Dr Harsha de Silva has said he is happy that the government is continuing with his projects after changing their names.
Speaking to the media after Indian Prime Minister Narendra Modi had inaugurated a 5,000-metric-ton cold storage facility in Dambulla, Dr de Silva said the construction of that facility had been initiated in 2019 with a grant from India, during his tenure as Minister of Economic Reforms. The name of the project, Prabhaswara, had been changed, he claimed.
Dr de Silva said he had not been informed of the opening of the storage facility.
He said a plaque had been installed with names of the Indian prime minister and President Anura Kumara Dissanayake inscribed on it in violation of the NPP’s pledge that the names of its leaders would not be displayed in that manner.
Dr de Silva that he was genuinely happy about the opening of the country’s first agricultural storage complex capable of controlling temperature and humidity.
“Due to the collapse of the Yahapalana government, we were unable to complete the project. Later, those who came to power had no desire to finish the work. I believe that this government will ensure that farmers will benefit from the business plan we developed.
by Dhammika Salwathura
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