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| Tuesday, 2 September 2003 |
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Tax Amnesty a resounding success They say that there are only two certainties in life: death and taxes. But there is clear evidence here that some people have managed to escape the latter skilfully. However, the recent tax amnesty enabled many of them to get into the tax fold without facing punitive action. The Tax Amnesty thus granted under the provisions of the Inland Revenue Amendment Act has become a resounding success, with a record 51,500 declarations by the closing date (August 31). Finance Minister K.N. Choksy has gone on record saying that this is the highest number of declarations ever made to the Department under any of the tax amnesty laws since 1964. This means a total of 251,500 income tax files, taking into account the files already with the Department. Certain quarters criticised the amnesty on the grounds that it would be a 'pardon' for the tax sins committed by a large number of persons involved in the black economy. Although it is true that no questions were asked as to how they acquired wealth, these critics have failed to see the good side - the new 50,000 plus taxpayers will now contribute to the formal economy and by extension, to national development. The Amnesty has yielded other distinct advantages - an increase in bank deposits and greater participation in purchasing Treasury Bills and Treasury Bonds. As Finance Minister Choksy points out the additional funds gained through the amnesty will be available for economic expansion and the creation of employment opportunities. Income tax, being a direct tax, is derived from the more affluent sections of society. Now that there are more tax payers in the tax net, the government should seriously consider reducing the burden placed on the less affluent sections of society through indirect taxes such as the Value Added Tax (VAT). Indeed, the failure of the authorities to collect Rs.20 billion due from VAT points to major deficiencies in the indirect tax system. While the eventual goal of the government should be eliminating such indirect taxes, every effort should be taken to ensure a proper collection procedure in the meantime. There are many unscrupulous traders who try to evade customs duties as well, depriving millions of rupees to the government coffers. Although 51,000 people have become legitimate taxpayers, the truth is that there are thousands of others who do not pay a red cent as income tax. They have somehow avoided the taxman for so long and even the recent amnesty has had no effect. The Inland Revenue Department and the proposed Revenue Authority should take all possible steps to track down these individuals and take stern action against them. In this context, Deputy Finance Minister Bandula Gunawardena has announced the establishment of a special unit to probe alleged concealment of income and assets and carry out raids on such individuals and institutions. This is a commendable move and the full cooperation of the police should be sought - and given - to this special unit's officers to carry out their duties without fear. By the same token, several genuine taxpayers who have duly paid their dues for years, have made a reasonable request for special concessions and incentives for their honesty. This is an aspect that the authorities should consider earnestly. The proposed Revenue Authority, which will combine several tax and duty collecting agencies of the government under one roof, will help streamline tax collection. Right now, several government institutions engage in this task and some of their functions overlap. An Authority will also help eliminate or minimise the red tape and paperwork involved in filing income tax returns. |
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