Nation Building tax amendments
I wish to congratulate the Government for the following amendments
made effective January 1.
1. The abolition of the Provincial Council Tax – BTT.
2. Reducing NBT rate from 3 percent – 2 percent.
3. Making entire NBT payable as an allowed expenditure for tax
purpose instead of having a portion disallowed.
4. Including wholesale and retail trade in NBT system but permitting
50 percent rebate so that effective rate is 1 percent like BTT.
This is a correct measure towards reducing the number of taxes and
making tax system very effective.
However there is a drawback in this arrangement. It is true by
reducing the threshold from 650,000 per quarter to 500,000 makes more
people become liable for NBT. However several present BTT payers will
escape NBT liability.
In the past BTT did not have any threshold. Now by permitting Rs
500,000 even the number of present BTT payers will become exempt from
NBT which results in reduction of revenue income making. The Government
should not expect to collect maximum revenue from large companies only.
Large Taxpayers Unit – (LTU) if correctly checked small and medium
enterprises would give better income than LTU enterprises).
Tax burden should not be placed only on companies which are liable
for VAT, NBT, ESC and Income Tax. I could remember upto July 31, 2002
the Defence Levy of 7.5 percent was paid by non GST payers till the
introduction of VAT on August 1, 2002.
Therefore I make the following suggestions.
1. All present BTT payers should pay NBT after January 1, 2011 – no
2. Threshold for wholesale and retail trade should be 100 percent per
3. A new NBT unit be introduced to collect NBT as the number of files
would be increased now.
4. A survey should be taken to identify wholesale and retail traders
liable for NBT islandwide.
5. Special attention should be drawn on disguised income earners such
a. Small hotels, restaurants, eating houses and bakeries
b. Tutories, music and dance teachers
c. Hair dressing salon, beautician and laundries
d. Caterers, cake decorators, suppliers of milk to offices
e. Meals on wheels – sale of cooked food via vans
I am certain that there will be strong criticism against my
suggestion. It should be noted that targeted tax revenue for 2011 should
be reached to continue the concession granted or otherwise additional
taxes will have to be imposed.
The tax burden should be shared by all on an equitable basis for the
benefit of the nation. I hope the Trade Ministry and policy planners
would take corrective measures.