Private sector must stop corruption and pay their taxes to build a better Sri Lanka

Colombo (The Island/ANN) - Original title: Stop corruption and pay your taxes to build a better Sri Lanka

Sri Lanka's Treasury Secretary Dr. PB Jayasundera called on the private sector to stop corruption and pay taxes and work harder in order to transform Sri Lanka into a more vibrant economy where all citizens benefited from development, as government tax revenue continued to be on a declining trend despite efforts by the government to reduce tax rates and simplify the system.

Addressing a packed audience at the Colombo Hilton last week, where the Department of Inland Revenue organised its first-ever mid-year taxation seminar, the top public servant said tax rates were lower and more affordable than ever before while the tax system was simplified over the past three years, making it more predictable.

"The idea was to lower tax rates, simplify the system and broaden the tax base in order to increase revenue. We have done the first two, but without broadening the tax base lower tax rates are not feasible," Dr. Jayasundera said.

In 2012, Sri Lanka's revenue declined to 13 percent of GDP from 14.3 percent of GDP in 2011, mainly due to tax revenue declining from 12.4 percent of GDP in 2011 to 11.1 percent in 2012.

Revenue from VAT declined by 0.8 percent of GDP in 2012 compared to 2011 (3.5 percent to 2.7 percent of GDP), mainly due to many exemptions or zero ratings. Income tax declined from 2.4 percent GDP in 2011 to 2.3 percent of GDP in 2012 due to rate adjustments not being matched by broadening the tax base in 2012.

Dr. Jayasundera said businesses and banks should stop manipulating their books and provide accurate returns. He urged top professionals and every citizen earning more than 50,000 Sri Lankan rupees (US$388) a month to step forward and open a tax file and make their returns.

"Both the public and private sectors are liable to pay tax. Even politicians pay taxes. I live in this country, therefore I pay taxes," he said.

"Paying taxes is a status. Some people enjoy status because they hold a certain position, they live in a particular area or house, drive an expansive car, where a suit or lead a certain lifestyle and have their hair done by a particular hairdresser.

"But paying taxes in an honourable status because they contribute to the existence of the government which provides law and order, welfare, infrastructure and all sorts of good things a country needs.

"I hope we develop a community where people pay their taxes. Banks and big firms must not manipulate their books, this must stop. Tax rates are low and the government has given you a fair deal. There is peace, development, stability and better prospects, what more can you ask for?

"Don't talk about corruption. Instead, you should adopt best practices and remain honest. Stop corruption. You cannot clap with one hand. This is bad for the country. The private sector, the business chambers must be able to come forward say 'we have not bribed anybody'.

"You have to do this and this would give the country are lot of credibility and the country would gain immensely," Dr. Jayasundera told the large private sector gathering.

He said the government was committed to further simplify the tax system, provided the base was broad enough to bring in enough revenue.

"We will bring further simplicity to bring everybody in to the tax net. In fact, all those earning less than 50,000 rupees need not pay taxes, only those who can afford to so. It is worth paying taxes. The country is in a journey of rapid development.

"There are shortcomings but we are making progress. We have 95 percent electrification and roads are much better, maybe not up to everybody's standards, but improving nonetheless. Quantify all these savings. The tax rate reductions have also generated significant savings to the private sector.

"The individual tax rate is low and reasonable. The corporate tax rate has come down from 37 percent to 28 percent. Tourism, construction and SMEs pay low rates. There are many other taxes that have been removed.

"We have improved in the World Bank Doing Business Index. The decades-long war is over. All this has created savings. Now, the private sector must invest and work hard in with an entrepreneurial spirit to transform this country," Dr. Jayasundera said.

Inequality and injustice is huge in Sri Lanka because of massive tax evasions in the country, Senior Minister of Human Resources and Chairman Parliamentary Committee on Public Enterprises (COPE) D.E.W. Gunasekara said recently.

"Economic growth has doubled. The per capita income has doubled. But where is the evidence and can we see the results? Is it in the Treasury's report or can we see an improvement in living standards?" the outspoken senior minister asked.

"The tax-to-GDP ratio is the lowest since independence and non-direct taxes account for the bulk of the government's tax receipts. This shows that income disparity is huge. Inequality is rising and this is a huge injustice to the people of the country."

The ratio for direct:in-direct taxation in Sri Lanka is close to 20:80.

"As long as the revenue from direct taxation remains low, this ratio will prevail and this in turn means that the bulk of the burden of indirect taxation will be felt by the poor people," Dr. Saman Kelegama, Executive Director, Institute of Policy Studies told a recent forum. He said the ideal was a ratio of 40:60.

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • AFP monitoring deployment of Chinese seaplanes in Spratlys
    AFP monitoring deployment of Chinese seaplanes in Spratlys

    The Armed Forces of the Philippines (AFP) is adopting a wait and see approach amid reports that China will soon deploy seaplanes to further strengthen its maritime claims in the disputed Spratlys. Brig. Gen. Joselito Kakilala, spokesman for the military and commander of the AFP Civil Relations Service, said they have yet to ascertain the real purpose behind China’s continuing aggressive moves in the region. “We will wait and see before coming up with an official stand,” Kakilala said when …

  • US eyes access to Phl bases in 8 locations
    US eyes access to Phl bases in 8 locations

    The United States has asked for access to Philippine military bases in eight locations to rotate troops, aircraft and ships as Washington shifts its forces to Asia and as China expands its military presence in the South China Sea. US Defense Secretary Ash Carter, in a speech in Arizona, has outlined Washington’s next phase in its Asia “pivot,” deploying its most sophisticated destroyers, bombers and fighters to the region. The Asia “pivot” has already seen US Marines rotating through the …

  • Washington bucks China’s aggressive actions
    Washington bucks China’s aggressive actions

    Short of condemning China’s aggressive actions in the West Philippine Sea, a senior US military official said Washington does not support any act of coercion and bullying. “We don’t stand for coercion, bullying and aggressiveness,” said Brig. Gen. Christopher Mahoney, assistant US military director for  Phl-US Joint Balikatan Exercises 2015. At the sidelines of this year’s joint military exercises’ static aircraft display held at Clark Air Base in Pampanga, Mahoney told a media briefing that …

  • ‘Giving Bangsamoro police control is constitutional’
    ‘Giving Bangsamoro police control is constitutional’

    The proposed grant to the chief minister of the envisioned Bangsamoro region of operational control over police forces in the area is consistent with the Constitution, a senior administration lawmaker said yesterday. Rep. Elpidio Barzaga Jr. of Dasmariñas City in Cavite made the statement to allay the fears of his colleagues that the proposal, contained in the draft Bangsamoro Basic Law (BBL), would violate the Charter. It is clear in the proposed BBL that the Bangsamoro police will be part …

  • Noy off to KL for Asean meet
    Noy off to KL for Asean meet

    President Aquino will arrive here this afternoon with Manila hopeful of support from the Association of Southeast Asian Nations (ASEAN) to achieve peace and stability in the West Philippine Sea (South China Sea) as well as economic prosperity and inclusive growth among the people in the region. Philippine Ambassador to Malaysia Jose Eduardo Malaya III said that with respect to the dramatic developments in the South China Sea, Malaysian Foreign Minister Anifah Aman had called for the early …

  • Madrid Fusion Manila reignites Pinoy appetite for great food
    Madrid Fusion Manila reignites Pinoy appetite for great food

    After months of preparation and hard work from both the government and private sectors, the future of food is finally here in the country’s capital. Madrid Fusión Manila opened its doors on Friday to an international delegation who eagerly awaited the discussions of some of the most renowned and revered names in the culinary world. Madrid Fusión Manila is a historic gastronomic event marked by talks and exhibitions that showcases Spain and the Philippines’ shared cultural heritage, as well as …

  • Family receives execution order, visits Mary Jane
    Family receives execution order, visits Mary Jane

    As Philippine officials continue to plead for a stay in the execution of death convict Mary Jane Veloso, the Indonesian government has sent a notice to her family ordering her execution at an undisclosed date, the Department of Foreign Affairs (DFA) said yesterday. Foreign Affairs spokesman Charles Jose said Indonesian authorities also allowed Veloso’s family and her lawyers to visit her on Nebu Kambangan execution island. “The Prosecutor gave notice letter to the family of Mary Jane …

  • ‘Pinoys’ cheerful attitude backs tourism campaign’
    ‘Pinoys’ cheerful attitude backs tourism campaign’

    The 2015 World Happiness Report ranking the Philippines as 90th among 158 happiest countries is a validation of the government’s tourism campaign, “It’s more fun in the Philippines,” a Palace official said yesterday. The news did not come as a surprise as Filipinos are naturally cheerful, Secretary Herminio Coloma Jr. of the Presidential Communications Operations Office said. …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options