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| Friday, 16 July 2004 |
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Inland Revenue Department to be restructured to broaden tax net by Shirajiv Sirimane The government will introduce several measures to broaden the tax net and generate more income to the Treasury without introducing new taxes, which would be a burden on the public. According to Assistant Secretary to the Treasury, S. B. Divaratne, one of the first things that would be done is to restructure the Inland Revenue Department (IRD). "The Department is far behind present times as it still functions under laws and guidelines laid down in 1974. There is an acute shortage of employees and this is the area, which would be first addressed," he said. The project revenue for last year could not be achieved and one reason for this was the problem at the IRD. "With the restructuring program which has already been approved by the Cabinet, we are hoping to achieve Rs. 331 billion," he said. Sri Lanka's legislature with regard to tax collection is highly complicated and many have exploited these loopholes withholding information from paying taxes. He said that some professions such as doctors, lawyers, international school owners and teachers conducting private tuition classes have been exempted from taxes and laws would be introduced to tax them. The problem the Department is facing in this regard is that their dealings are cash and it is difficult to trace them. "However the Department will scan their bank accounts if they are not paying income tax," he said. He said that more teeth would be given to the IRD and the department would introduce a new tax culture. Sri Lanka is one of the lowest tax paying nations in Asia and the contribution from the citizens is only 2.2 percent of the Gross Domestic Product (GDP) and in other countries it is over 4 percent. The collection of government revenue has declined considerably over the years from 19 percent to 14 percent of GDP. This is due to several reasons including limited resources mainly due to lack of trained staff since the workforce of the department consist of only 1,257 employees. The restructuring program would focus on five key areas, Tax policy development, Human resources, Technology upgrading, tax audit surveillance and administration. A steering committee for the restructuring has already been appointed. The IRD also plans to incorporate the Land Registry and the Registrar of Motor vehicles to the department to speed up procedure. |
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