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Reduce distortions in tax system - NCE

The National Chamber of Exporters (NCE), in its Budget Proposals for 2004, has recommended that the Chamber Proposals were meant to reduce the huge budget deficit by broadening the income tax net to cover Politicians/Public Servants who do not pay taxes.

The proposals have created a level playing field and narrow distortions and discrimination between the tax and non-tax payers, NCE Executive Director Rasa Weerasingham said.

The Chamber has also recommended the closure of all unproductive State institutions.

It has also called for the removal of the disparity between the BOI and non BOI institutions.

The proposals: Proposal to increase Revenue

Broaden Income Tax Net to cover Politicians/Public Servants who do not pay taxes and create a Level Playing Field and narrow distortions and discrimination between the tax and non-taxpayers.

Offer special recognition and VIP treatment to taxpayers issuing old/Silver/Bronze cards " similar to credit cards". Offering special concessions/ fast tracks at Airports and Customs to motivate Payment of Taxes, in order to make them feel that they are privileged citizens.

Government policy is not to provide subsidies. The Parliament restaurants should also be run on profit making and self-sustainable basis, instead of subsidized meals but at market rates plus relevant taxes.

Introduce Road Tax for the maintenance of roads. The tax to be recovered at source by slightly increasing the price of petrol/diesel say (Rs. 2) and abolish the annual revenue license fee of vehicles. The tax collection could be transferred to a Road Maintenance Fund Taxes will be recovered on the basis of road usage.

Proposal to reduce expenditure

Dissolve Provincial Councils which were set up to settle the North-East crisis but implemented only in the South which is a "White Elephant" creating several conflicts between Parliament and Pradeshiya Sabhas inconveniencing the public with the normal cost to the country and taxpayers. Most of the expenditure on Provincial Councils is unproductive.

Reduce the number of Ministries to about 20 and have supporting services to such institutions, which either overlap or in conflict, which creates a lot of unnecessary bureaucracy and waste of time.

Close down Unproductive Government institutions or merge them wherever relevant e.g. Multitude of government training institutions.

Create one institution which can handle EPF/ETF

Instead of two, one institution can handle this and reduce expenditure not only in the hands of the Government but also the Private Sector involving a lot of bureaucracy and form filling.

Improve Recovery system of EPF/ETF through the normal banking channels by introducing EPF/ETF Savings Accounts for employees where employers will directly make payment to the Banks where it would provide effective monitoring by the employees themselves, Savings Accounts will be up to date unlike now, where postings are well behind time.

The normal conditions for EPF/ETF could remain but payment to employees on completion of employment could be expedited on this basis. Currently a lot of procedures, bureaucracy are taking place and people are being pushed from pillar to post. This would avoid corruption.

Employment Generation

A crash program for upgrading skills of young people using the existing private organisation as trainees/apprentices for a specific period, not subject to normal Statutory laws while in training.

Upgrading skills for "on the job training" will provide many opportunities for employment generation and encourage private sector to train more people and upgrade skills and save much expenditure for the Government.

Growth increase

Utilise increased Revenue and Reduction of Expenditure to create a Development Fund and to be utilised for development purposes.

Harness Private Sector Civil Society to directly participate and develop infrastructure in different areas and also to be responsible for maintenance thereafter e.g. hospitals, by-roads, schools and playgrounds.

This would eliminate bureaucracy, delays and make private sector more socially responsible and make them satisfied, instead of their paying taxes to the Government. Tax concessions to be given for such expenditure.

All this would mean more employment and development. Reduce the disparity between BOI and Non- BOI exporting companies since they are competing in the same market (International) leading to Sri Lanka loosing overall. Reduce the Income Tax further on export profits to give some relief for appreciation of the Rupee.

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