Govt. plans to rope in more taxpayers

By Bandula Sirimanna

The Government plans to raise considerable revenue by widening the tax net as the country’s tax revenue collection is off target by Rs. 8 billion from January to May.

Revealing the state of the economy, Deputy Finance Minister Ranjith Siyambalapitiya told The Sunday Times a sum of Rs 195.6 billion was collected during the period January 1 to May 31 - lower than the targeted revenue of Rs 203.6 billion.

He said the shortfall in the tax revenue by Rs 4.5 billion was due to the removal of VAT from 12 essential commodities in a bid to bring down the cost of living. On the other hand taxpayers were in the habit of paying taxes annually but not quarterly. This was another reason for the failure to collect the balance Rs 3.5 billion targeted for the first quarter, he said. The shortage of tax officers has been tackled effectively by appointing one thousand graduates to fill vacancies.

The minister said the Government had not made any proposal to recover taxes upfront as reported in last week’s The Sunday Times. However tax experts quoted in that story, reiterated this week that the proposal was given serious consideration. The minister said incentives and concessions to taxpayers would be granted to raise tax revenue.

Mr. Siyambalapitiya said that among the 300,000 tax files there are a number where the declarants were not taxable and have files for the purpose of obtaining tax refunds. Others are of moderate income earners who do not pay much in taxes. The Government plans to rationalize spending while increasing revenue by Rs. 350 billion from direct income tax collections this year by granting incentives and maintaining cordial relations with tax payers.

The minister said a directive has been issued to Inland Revenue officers to collect direct taxes treating tax payers in a very cordial manner.

He said a sum of Rs 10,000 will be levied as income tax from a person who earns an annual income of Rs. 500,000. Therefore there was no need to seek the assistance of tax consultants by paying them high fees for their advice to avoid paying such a small amount, he said.