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| Tuesday, 22 February 2005 |
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Good news for investors Amidst the bleak economic forecasts after the tsunami tragedy, Treasury Secretary Dr. P. B. Jayasundera had some good news for investors and the public. He has said that the Government's 2005 revenue target should increase over 15 percent of the GDP. One of the main planks of this goal is enhanced tax revenue. "In 2004 the tax income was Rs. 281.3 billion. Our target for this year is Rs. 351 billion. The Government plans to achieve that by implementing a more organised and uncomplicated tax collection system," says Dr. Jayasundera. With the number of taxpayers more or less unchanged, the government was able to achieve the target thanks to increased commitment on the part of the staff of the three revenue departments. In other words, increased vigilance and efficiency has netted in more funds to the Treasury. The officers would, of course, have been encouraged by the government's assurance that it will not set up the Revenue Authority proposed by the previous Government. This performance is remarkable as the uncertainty in the tax policy due to the tax amnesty also contributed to declined revenues in the previous year. There is no doubt that tax administration and collection should be streamlined. Taxpayers will also find it convenient if tax payments methods were easier. Increasing the efficiency of the tax collecting bodies is therefore vital. Sri Lanka is receiving financial assistance to modernise the inland revenue administration from the Asian Development Bank (ADB). With ADB support, a high-tech Inland Revenue Department will soon be a reality. New tax laws will also be essential. These should also focus on widening the tax net, as the actual number of tax payers is far less than it should be. A new tax charter and a code of conduct have also been proposed. The Department should also have an online tax information and assessment facility. Many of our tax collection procedures are several decades old and should be updated to modern international standards. The authorities should also consider rewarding genuine long-term taxpayers while including a mechanism that facilitates punitive action against tax dodgers. The work of Customs and Excise Departments should also be streamlined. These are very important to the national economy and should be geared to maximise revenue generation. Right now, all three departments need a modern Information Technology infrastructure and a genuine effort to raise efficiency. Direct and indirect tax revenue will be one of the key components of funding for the massive recovery effort currently under way. Sri Lanka will need approximately US$ 1.5 billion to effectively implement a recovery and reconstruction strategy, according to the Asian Development Bank (ADB), the Japan Bank for International Cooperation (JBIC) and the World Bank. The three institutions have published a preliminary damage and needs assessment report following the tsunami. |
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