A letter from the Commissioner General was recently published in the media, stating that the highest tax revenue in the history of domestic revenue has been collected.
We decided to further analyze the data in this letter, which states that there has been a revenue growth of over 25.1%, as we have also contributed to collecting this tax revenue.
Although the letter from the Commissioner General mentions that the total income earned in 2024 is a rough estimate (marked with an asterisk), which is quite humorous, assuming that the data is correct, the following thoughts are presented for your consideration.
The increase in revenue can be directly attributed to the following factors:
- The 3% increase in VAT from 15% to 18% in 2024 (the tax impact is estimated at Rs. 151,756 – please re-calculate).
- The lowering of thresholds for Social Security Contribution (SSCL), Pay As You Earn (PAYE) tax, and VAT, which means more people are now subject to these taxes.
- The department’s practice of amicably requesting taxpayers to pay their taxes for the first quarter of 2025 in advance, during the last month of 2024.
Considering the above, what has the tax department actually done? They have a large workforce, receive incentives, other benefits, and fuel allowances.
Isn’t this public money? So, is this tax paid by taxpayers voluntary or with no force?
What have tax officers done?
Isn’t it shameful to claim credit for tax revenue that was collected naturally?
Didn’t they even reach 100% of the target set for 2024?
While the whole country is aware of their numerous shortcomings, such boasting only leads to more discussions.
Upon further investigation, it was found that the department could have generated nearly double the revenue, not just Rs. 1,958,088.
However, this did not happen, likely due to the negligence of high-ranking officials in the department.
As far as we know, there were two Commissioners General in the department, one at the main building and the other at the tax office in Narahenpita.
Some taxpayers go directly to the Commissioner General in Narahenpita to negotiate installment payments for outstanding taxes and obtain penalty reductions by offering bribes.
There are rumors that this official personally contacts taxpayers with outstanding tax details obtained from the computer, intimidates them into meetings, and negotiates deals to grant concessions.
With this official set to retire soon and no one above him to oversee, the officials in the tax collection departments are facing great difficulties.
If this situation is true, it is no surprise that the tax revenue targets are not being met.
The IMF has repeatedly urged the collection of more taxes from high-income earners.
Although tax files were opened for all individuals aged 18 and above in 2024, there has been no significant impact. Moreover, there is no clear plan or strategy for tax collection.
Meanwhile, the government and the Ministry of Finance have been misleading the public with false reports.
While the department’s responsibility is to collect taxes accurately from those who should pay and build a sustainable tax-paying society, it is deceiving people with false promises.
However, not everyone is foolish, and all those responsible, including these officials, should know this.
There is a need for significant reforms within the tax department to improve efficiency, transparency, and accountability.
“Clean Sri Lanka”, do a thorough audit.
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