Editorial
Taxpayer friendly Inland Revenue Dept. urgent need
Many compliant taxpayers have expressed their frustration with the Inland Revenue Department (IRD) for insisting that the Return of Income for the year of assessment 2023/2024 be filed as an electronic return (e-return). It is perplexing why such a requirement is being enforced in a country such as ours where computer skills are woefully lacking. In many other countries the taxpayer is entitled to submit a return either electronically or by hard copy (paper). The choice should be with the taxpayer and not the IRD. In some countries, any tax refunds to individuals are inevitably delayed for those who submit manual returns compared to those who submit e-returns. This incentivises the taxpayer to embrace technology. But here, it is forced down the taxpayer’s throat.
A fundamental principle must be that tax compliance should not result in the taxpayer having to incur additional cost or physical/mental stress in fulfilling their civic obligation of paying their income tax. Many senior citizens are not computer savvy enough to navigate through complex returns or do not have access to a laptop or other paraphernalia needed to upload supporting documents. Therefore, many individual taxpayers who struggle to complete their returns by themselves are now forced to engage the services of a professional tax consultant or accountant to submit their returns. This is an additional cost that taxpayers should not be burdened with. We understand that the IRD reluctantly accepted hard copy (paper) returns from some senior citizen who insisted they could not submit an e-return.
The IRD should concentrate on getting more people liable to pay tax to do so, thus widening the tax net instead of penalizing those who settle their dues but may delay submitting their return for the above mentioned reasons. The Inland Revenue Act provides penalties for failure to file a return on time and for criminal proceedings as well as issuing default assessments where necessary. It has often been said, with good reason, that the IRD bullies people who pay their taxes and submit their returns and does little to tackle blatant evasion which is rampant.
We have been told that taxpayers who receive interest income from fixed deposits are required to enter a significant amount of information into the e-return, which is tedious and unnecessary, particularly if the taxpayer can submit or upload a certificate from the deposit taker confirming the interest received and the advance income tax deducted at source. As in other countries, it is up to the IRD and the deposit taking institutions to devise a compliant digital platform that will enable such information to be uploaded to the IRD’s Random Access Management Information System (RAMIS).
IRD invested hugely in setting up RAMIS but was unable to utilize it effectively over many years. The banks and other deposit, too, have not played their part in this because many banks are not issuing certificates to their customers that disclose all the information required by the IRD. Time was when a blanket 15 percent withholding tax (WHT) was imposed at source on interest and dividend income with no further liability thereafter. This undoubtedly imposed hardship on those not liable for income tax in obtaining notoriously slow refunds from the department and was an advantage to high income earners. Nevertheless, like PAYE (Pay As You Earn) tax, it was an easy collection method for IRD.
After the November deadline for submitting the annual return for 2023/24 passed, the IRD issued a circular extending the deadline for submitting tax returns for that year until December 7. The circular cites the difficulties taxpayers encountered last week due to the inclement weather that prevailed in the country. No mention has been made of the RAMIS system being more or less inaccessible in the days leading to the deadline, as it could not deal with too many taxpayers trying to access the system at the same time! The circular also mentions that IRD officials will offer special support until December 6, 2024, for those who visit the department for technical assistance to submit their return online. This is most welcome.
According to currently available information, about a million taxpayers are registered with the IRD. This seems insufficient, considering that more than eight million are employed, and the income threshold for paying income tax is Rs. 100,000 monthly. It will be interesting to know as to how many of the million have submitted their tax returns by the due date or will do so in the next few days and weeks. Undoubtedly, people need to be tax-compliant, but it is also necessary for the IRD to make the process easy for taxpayers to make payments and submit their annual income tax returns.
The IRD currently does not accept cheques for settling tax obligations. A taxpayer must make a direct bank transfer or settle his/her dues through a banker’s pay order. This imposes an unfair added cost on tax payers as well as the inconvenience of having to visit the bank for this purpose. This requirement clearly is intended to ensure that tax cheques do not bounce. But the department is empowered to impose penalties on those whose cheques are dishonoured. Why impose additional burdens on taxpayers accustomed to meet their obligations by writing a cheque instead of visiting a bank and paying for the issue of a banker’s pay order?
The bottom line is that the IRD must be more taxpayer friendly than it is at present. Printing platitudes like “Thank you for paying your taxes” on its stationary is just not enough. Honest taxpayers with files on record must not be bullied, as is often done at present, and burdens like the compulsory online payment requirement now imposed as well as the ‘no cheques’ rule must done away with. Also, the department must take note of the resentment of people who pay taxes long seeing those who do not getting away Scott free.
Editorial
Cost-cutting and hypocrisy
Wednesday 22nd January, 2025
Former President Mahinda Rajapaksa (MR) is willing to vacate his official residence if the government makes a written request to that effect, his eldest son, Namal, has said. This has been MR’s response to President Anura Kumara Dissanayake’s recent statement that the former Presidents would be asked to pay monthly rentals determined by the Government Valuation Department for their official residences or vacate them immediately. He said MR would have to pay about Rs. 4.6 million a month as rent! Cabinet Spokesman Dr. Nalinda Jayatissa has said the government will make no such request, but MR should leave that house.
President Dissanayake is of the view that the official residences of all ex-Presidents and their imputed rents will be assessed so that the public will know how much they spend to maintain the former leaders. Similarly, the people have a right to know the total value of the vehicle fleets at the disposal of the President, the Prime Minister and the Ministers, and the imputed rentals for the President’s House, Temple Trees, the parliamentary complex, etc. Why can’t parliament be moved back to its original location by the sea? Most of all, the MPs’ housing scheme at Madiwela must be turned into a university hostel complex, as the NPP promised before last year’s elections.
Meanwhile, all losses politicians and their parties have caused to the state must also be estimated and recovered. Maithripala Sirisena, whom the JVP backed to the hilt, during his successful presidential election campaign in 2015, has said the JVP burnt down about 240 Agrarian Service Centres together with paddy storage facilities in the late 1980s. Besides, the JVP destroyed hundreds of buses, over a dozen trains and countless transformers and other such assets of the Ceylon Electricity Board.
President Dissanayake has made an issue of public funds spent on providing security to the former Presidents. No one in his or her proper senses will demand that the VIP security divisions be downsized; the President and the Prime Minister must be given maximum possible protection, but the public should be informed of how much it costs the state coffers to protect the incumbent government leaders.
The JVP-led NPP government has also pledged to recover Sri Lanka’s stolen assets. That will be a great service to this country, which is desperate for funds. The ill-gotten wealth of former government leaders and their kith and kin may not be in Uganda; it must be in some other countries. The government must redouble its effort to fulfil its promise to trace those illegal assets stashed away overseas and bring them back. A probe must also be launched to trace and recover vast amounts of gold and cash robbed by the JVP from banks, pawning centres, and members of the public during its second uprising.
How much does it cost the public to provide subsidised food and beverages to the MPs? We suggest that the parliament restaurants be privatised. The MPs must not be given official vehicles. If the lawmakers in affluent countries such as Sweden travel in buses and trains to attend the parliament, why can’t their counterparts in a bankrupt country like Sri Lanka do so? In Sweden, only the Prime Minister is given an official car and all others including the Speaker get only bus and train passes from the state. Now that the government has reportedly decided to use the official residences of ministers for tourism-related purposes to boost the economy, the Speaker’s House near the Parliamentary complex should be turned into a boutique hotel.
Most of all, since the government is in a cost-cutting mode, will it reveal whether it will scrap the Provincial Councils (PCs), which are a drain on the state coffers? The JVP went on a killing spree in the late 1980s to torpedo the PC system, albeit in vain. The PCs, which the JVP has publicly condemned as a white elephant, obviously cost the country much more than the former President’s official residences and security contingents, don’t they?
We are also burdened with a bloated public service with a state employee for every 14 citizens. There are about 1.5 million public workers whereas the actual need is for only about half of them. Will the government reduce the burgeoning public service to save state funds?
Editorial
Comrades see red
Tuesday 21st January, 2025
A string of defeats in cooperative society elections during the past few weeks, indicating a sharp decline in the JVP-led NPP’s approval rating, and growing public disillusionment with the incumbent dispensation, has jolted the NPP leaders into making a determined bid to turn things around with the next Local Government (LG) elections slated for April. They are however labouring under the misconception that their pre-election tactics will help boost their popularity as a government. So, instead of carrying out their duties and functions diligently and living up to the people’s expectations, they have chosen to bash their political rivals. They endeared themselves to the public by being magnanimous in victory, but the problem with magnanimity of Sri Lankan politicians is that it falls by the wayside when the worm shows signs of turning.
The JVP/NPP has launched a series of public rallies to shore up its support base ahead of the upcoming LG polls. Interestingly, at these events the government leaders mostly repeat what they said during their presidential and general election campaigns. If they say anything new, it invariably runs counter to their promises. What President Anura Kumara Dissanayake has said about the Trinco oil tank farm is a case in point. Over the weekend, he said Sri Lanka needed about 24 out of the 99 tanks; about 61 tanks would be developed as a joint venture between Sri Lanka and India, and the Indian Oil Company would utilise the others. When the Gotabaya Rajapaksa government proposed to do so, the JVP/NPP condemned it as a total sell-out. During its reign of terror in the late 1980s, the JVP murdered many of those who defied its ban on Indian goods and services; its sparrow units even killed traders who sold ‘Bombay onions’, which the then UNP government had to dub ‘Lanka big onions’ to save lives! Today, the JVP in the NPP’s clothing is sharing the Trinco oil tanks with India! It is heartening that sobering economic reality has had a mellowing effect on the JVP’s hidebound ideological shibboleths which plunged the country into a bloodbath about three and a half decades ago, but shouldn’t the JVP leaders tender an apology to the public for the heinous crimes their party committed in the name of a campaign to defeat what it called Indian expansionism?
President Dissanayake went ballistic at a rally in Katukurunda, Kalutara, on Sunday. Tearing into former Presidents of Sri Lanka, he repeated his campaign rhetoric. Claiming that former President Mahinda Rajapaksa was occupying a state-owned house, whose imputed rent was Rs. 4.6 million a month, President Dissanayake said Rajapaksa would be asked to pay that amount as rent or vacate the house and collect the housing allowance (Rs. 30,000) the latter was entitled to. Was it an instance of a subconscious motivation manifesting itself? The government is under pressure to introduce an imputed rental income tax as part of the ongoing IMF programme.
The former Presidents of this country are not without private residences, and therefore it defies comprehension why they should be given state-owned houses. However, the question is why President Dissanayake, who takes on the former Presidents with might and main, has baulked at dealing with the large-scale rice millers and private bus mudalalis, with a firm hand despite their exploitative practices. His efforts to strip the former Presidents of their ‘undue entitlements’ may strike a responsive chord with the public, but such action will not help assuage the people’s resentment at the government, which has failed to fulfil its main election promises, and cannot even make rice freely available at affordable prices.
It will be a big mistake for the government to reduce security provided to the former Presidents, especially those who were instrumental in defeating terrorism. Equally, one may recall that in 2020, while being detained in the Boossa Prison, three notorious criminals, Podi Lassi, Kosgoda Tharaka and Pitigala Keuma, threatened to harm the then President Gotabaya Rajapaksa, Defence Secretary General Kamal Gunaratne, and some senior prison officers. Such is the power of the underworld. The government insists that security provided to the former Presidents has been reduced on the basis of proper threat assessments. But something that President Dissanayake said in Katukurunda on Sunday makes one doubt the veracity of that claim. Declaring that the number of security personnel assigned to former President Mahinda Rajapaksa had been reduced to 60, Dissanayake declared that if ‘whingeing’ persisted, those 60 personnel too would be removed. The subtext of his statement is that the controversial decision to reduce security provided to Mahinda Rajapaksa was not devoid of politics, and the government would not hesitate to strip him of security completely if he offends it further.
A government that raises public expectations but fails to live up to them loses its popularity. Popular support cannot be regained by means of rhetoric, threats, warnings, scapegoating or rows with the media. The NPP must understand this if it is to avoid a crippling midterm electoral setback.
Editorial
Hobson’s choice, swings and roundabouts
Monday 20th January, 2025
The Public Utilities Commission of Sri Lanka (PUCSL) has endeared itself to the people immensely by directing the Ceylon Electricity Board (CEB) to lower the power tariffs by an average of 20%. It was a case of Hobson’s choice for the NPP government, which insisted that a substantial electricity price reduction would not be possible within the next three years although it promised, before last year’s elections, to slash power tariffs by as much as 30% ‘in the near future’. The Opposition has mockingly asked whether ‘the near future’ is equal to three years.
The Opposition and some consumer rights groups have claimed the credit for the power tariff reduction. If they consider themselves so influential as to have power tariffs lowered, will they explain why they failed to have petroleum prices reduced?
True, the government only made a virtue of necessity by allowing the CEB to carry out the PUCSL decision on power tariff revision. If it had opted to do otherwise, the Opposition would have taken to the streets with the people joining it. But the fact remains that the NPP did not seek to railroad the PUCSL into doing its bidding. One may recall that the Rajapaksa-Wickremesinghe government prevented a downward power tariff revision by scuttling the PUCSL; it had some of the PUCSL members resign and removed its chairman by securing the passage of a motion in Parliament to that effect. The current administration did not do so despite having a two-thirds parliamentary majority. The Opposition says the government will strike back and smoke out the PUCSL members. It is hoped that the NPP will act prudently without providing its rivals with another rallying point.
The argument that the CEB should not be making profits at the expense of its consumers is tenable. The CEB has made huge profits. However, it has to repay its debts, and a fine balance needs to be struck between tariff reductions and debt repayment. Otherwise, it will be swings and roundabouts for electricity consumers, for the government will pass the cost of servicing the CEB’s debt on to the public in the form of tax increases. The proponents of power tariff reductions have chosen to gloss over this aspect of the issue for political reasons.
The NPP government finds itself in an unenviable position despite its mammoth electoral victory two months ago. The problem with raising the people’s expectations excessively is that a political party that captures power by doing so finds it extremely difficult to live up to them. The NPP resorted to sloganeering and made a host of promises as it was desperate to savour power. Its pre-election slogans, promises and demands are now boomeranging.
During their opposition days, the NPP/JVP leaders made fiery speeches tearing their political rivals to shreds and asking the SLPP-UNP government to slash taxes and tariffs and halve fuel prices forthwith; they insisted that all it would take to make rice freely available at affordable prices was a single stroke of the presidential pen; they condemned the Port City project as an environmental disaster sans any economic benefits to Sri Lanka; the NPP election manifesto promised biannual pay hikes for state employees among other things; it pledged to renegotiate the IMF programme, especially the Debt Sustainability Analysis; some former military officers who jumped on the NPP bandwagon promised to neutralise the netherworld of crime and narcotics in less than two months, and the NPP made a solemn pledge to have all the thieves of state assets thrown behind bars and recover the stolen funds posthaste.
Today, the NPP’s slogans, demands and unfulfilled promises, which are legion, have become grist for the Opposition’s mill. The government is dogged by its broken promises, which are likely to be its nemesis. Unfortunately, its confusion and incompetence have enabled a bunch of rogues who enriched themselves, ruined the economy and lost elections or skipped them for fear of defeat to crawl out of the woodwork and claw their way up.
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