Finance Minister Mangala Samaraweera, who held the first media briefing after assuming duties in the new ministry, pledged that the current direct to indirect tax ratio will be changed to bring about an equitable tax system in the country.
The move that is expected to see the light of day in three years time, according to the minister, aims at reversing the present tax system of 20 percent direct and 80 percent indirect tax ratio to 40 percent direct and 60 percent indirect taxes.
Terming it a regressive and totally unjust tax system the minister said a top priority during his tenure as the minister of finance is to revise the unjust tax system to provide greater relief to low and middle income earners and create an equitable tax structure in the country.
Referring to the crony capitalism and anarchic rule of the Rajapaksas, Samaraweera said come 2018 and 2019, the country will be loaded with a huge tax burden of around Rs. two to three trillion when the total income of the country is only around Rs. 1 trillion.
“The Rajapksa’s left a huge garbage pile much enormous than the Meethotamulla dump.
The former regime left us with corruption and violent garbage pile to clean up. The current government is saddled with cleaning up the mess,” the minister said.
He said the new Inland Revenue Bill will be hopefully passed in parliament by the third week of August and implemented next tax year. The Inland Revenue Bill was tabled in parliament on July 5. Currently it is left for the public to raise objections in courts before it is finally approved for enactment.
“We need to take a cue from Bangladesh and Myanmar which has a well managed tax system,” the minister said.
The great economic revolution introduced by J.R. Jayawardene in 1977 completed 40 years on July 22. All that good work which opened up the economy to the rest of the world paving the way for more employment and income to households went down the drain due to the thirty year war and crony capitalism of the Rajapaksas.
State Minister of Finance Eran Wickramaratne said the Rs. 10,000 monthly income earner and Rs. 1 million earner pays the same amount for a loaf of bread, dhal and all essential food items which is totally unfair.
“All have to pay taxes and there is no exemption. But that does not mean it should be unfair. We will introduce a just tax system to provide a level playing field for all,” the minister said.
He said all professionals including doctors, lawyers and engineers will be netted in the move to widen the tax net to improve fiscal consolidation.
The current tax to GDP as a percentage is around 12 percent which ideally should be around 18 percent according to tax experts.
We will provide relief to boost exports which is also come down as a percentage of the GDP from around 30 percent to around 15 percent.
“We are open to all suggestions and currently discussions including all stakeholders are being conducted to fine tune it before enforcing the law,” the minister said.