Pramuka and tax matters

There were two significant developments last week amidst the ‘hullabaloo’ over the drama at Rupavahini where its senior executives continue to come under attack by unidentified persons, the eastern poll; and the bomb blast at Wellawatte and not forgetting the ongoing operations in the northern theatre of war.

We are referring to the appointment of a new Commissioner General of Inland Revenue and the re-opening of the failed Pramuka Bank under a new state-run banking outfit, Sri Lanka Savings Bank,

While the appointment of the new tax chief has been welcomed in all quarters – described as “scrupulously honest” by one tax expert; the re-opening of the former Pramuka Bank was welcome relief for depositors, many of whom have dumped their life savings into this institution on the promise of a better future.

There are rumblings of discontent however amongst depositors because many may not be able to remove their savings until at least four to five years and one hopes this could be sorted out with the management and the government. The problem here lies in the fact that if everyone starts removing their deposits, there would be a huge run on the bank and lead to the earlier situation where Pramuka’s assets in terms of deposits were nowhere near its liabilities.

However there are also concerns raised about the manner in which the structure of withdrawals was worked out and many depositors seem unhappy with the formula. This needs to be sorted out fast, after all it’s the money of the depositors – their hard-earned savings – and it’s their right to be part of this process, if they have not been properly consulted.

The Sunday Times has been in the forefront of the issues relating to Pramuka Bank from the moment it was sealed by the Central Bank and we have repeatedly asked for fairplay and justice on behalf of the depositors. There were, sadly, a few cases of suicide from some depositors who were shocked and stunned by the closure. Some fell ill, some had heart-attacks. We will continue to closely follow the progress of the new bank to make sure the former Pramuka Bank depositors don’t get a bad deal. Having said that, we also welcome the reopening of the bank.

The new Tax Chief S. Angammana has promised to clean up the department and create a new ‘friendly’ face to the public. In recent years, the department has been getting a bad name after the horrendous VAT scam which is now before the courts but some of the biggest culprits are still at large.

Its former chief A. A. Wijepala retired from service and was not given the extension that he had apparently sought. His tenure in recent years came under severe scrutiny after the VAT scam hit the newspapers and drew public attention in particular because he was the head of the VAT department when the scam became public.

Two parliamentary committees - COPE and the Public Accounts Committee (PAC) -- raised serious issues over the VAT scam and the PAC also urged the government to suspend Wijepala until the VAT probe was over. That didn’t happen.

Then suspicion that Wijepala would be given an extension or a junior officer being appointed to the post of Commissioner General infuriated the entire staff at the department and they resorted to work-to-rule and protests, until government assurances were given that the due process would be followed – ie, the most senior officer for that post would be appointed.
The new Tax chief is said to be a simple and humble officer. His colleagues say his family lives in Kuliyapitiya and he is staying in rented accommodation in Colombo.

But things are not going to be easy. Government instititutions – particularly revenue-collecting ones – have often been plagued by political interference and the new Tax chief will have his hands full in not only wiping the slate clean but also keeping the (political) hounds at bay!