INSUBCONTINENT EXCLUSIVE:
MP Mahindananda Aluthgamage, in his capacity as the Chair of the Sectoral Oversight Committee on National Economic and Physical Plans, has
emphasised the need to establish a dedicated unit for overseeing institutions responsible for generating tax revenue, including the Inland
Revenue Department.The former minister also stressed the importance of the government taking decisive measures concerning officials who are
that following the discussion, the government has committed to reducing inflation to single digits, bolstering foreign reserves and
increasing government tax revenue.The parliamentarian made these statements during his participation in a press conference held at the
Aluthgamage said;A pivotal meeting took place with President Ranil Wickremesinghe and representatives from the International Monetary Fund
These discussions yielded remarkable results
Fund.The International Monetary Fund has emphasized three key points in their discussions
Accordingly, the government has committed to reducing inflation to single digits, bolstering foreign reserves and increasing government tax
revenue.Notably, food inflation, which previously stood at 95%, has now dipped to -5%
Overall inflation has decreased from 70% to a mere 2.6%, while foreign reserves have shrunk from 20 million to 4 billion
However, the primary focus of the International Monetary Fund remains on boosting government revenue, primarily due to the fact that 90% of
government income is derived from taxes.The government has set ambitious revenue targets, including Rs
3101 billion from the Inland Revenue Department, Rs
1217 billion from Sri Lanka Customs, and Rs
217 billion from the Excise Department
Unfortunately, the current figures fall short of these expectations, with the Inland Revenue Department collecting Rs
956 billion, Sri Lanka Customs contributing Rs
578 billion and the Excise Department generating Rs
109 billion, totalling only Rs
The committee has invited the Inland Revenue Department, Customs and Excise Department, which are the primary contributors to government
revenue, to discuss strategies for proper tax collection
Had these institutions implemented effective tax collection plans in 2022, they might have achieved the targeted income.In 2022, the total
number of personal tax files recorded stood at 292,000
Remarkably, in a country with a population of 22 million, this number represents just 290,000 tax files, meaning that only 10% of the
eligible taxes have been paid through these files.Furthermore, there are 105,000 registered companies, but only 15% of them are contributing
To manage this critical task, the Inland Revenue Department employs 2,500 individuals, and these 494 institutions account for 86% of the
Notably, the Customs Department faces a daily loss of Rs.1 billion, totalling Rs
180 billion in losses annually
Similarly, due to inefficiencies and irregularities, the Sri Lanka Customs incurs a yearly loss of Rs
360 billion, while the Excise Department loses Rs
60 million each year.One notable example is the liquor industry, which produces 50 million bottles of liquor monthly, adding up to 540-600
However, a substantial 40% of this production disappears off the books, with no state tax being collected on it.In 2018, a sticker unit was
introduced to enhance revenue collection
Initially, it led to an increase in government revenue, but it subsequently declined by 40% due to the proliferation of fake stickers
After the Excise Department was summoned before the committee, more than 40,000 counterfeit liquor bottles were seized.The inefficiencies of
these institutions are often attributed to politicians by the public
Therefore, it is crucial to monitor and implement effective programs to enhance government revenue.The Inland Revenue Department faces the
daunting task of collecting Rs
904 billion in taxes alone
Sri Lanka is unique in allowing individuals to submit four appeals without paying taxes to the government
It takes 15 years to process these appeals, causing significant delays in revenue collection.Therefore, there is a pressing need to
establish a dedicated unit to oversee and regulate these institutions
The committee has submitted a report to President Ranil Wickremesinghe in this regard
Despite the announcement of opening 1 million new tax files after a tax increase, only 10,000 new files are expected to
Several major institutions and businessmen in the country escape the scrutiny of the Inland Revenue Department and evade paying taxes
It is imperative for the department to develop a comprehensive program to address these issues.Government revenue plays a vital role in
providing subsidies, funding development activities and paying government employee salaries
The Inland Revenue Department should reconsider its approach to boosting tax revenue and it is high time for the government to take decisive
