Government hunts for more taxpayers
View(s):As tax revenue falls …
By Bandula Sirimanna
The Sri Lankan government, worried about dwindling revenue, is looking for new taxpayers with plans to reduce the taxable income levels to bring more public and private sector employees into the net, official sources said.
At a recent Finance Ministry meeting, it was proposed to lower the tax free income threshold per month to Rs. 400,000 from Rs 600,000 per annum which means that more people in this lower income bracket (around Rs 33,000 per month) will have to pay taxes.
Political analysts say the government would find strong opposition from various quarters if more taxes are imposed on the people coming on top of a massive hike in electricity prices from May.
Two rounds of talks on this matter were held with the participation of senior officials of the Inland Revenue Department (IRD) and the Finance Ministry and a final decision would be taken by Treasury Secretary Dr. P.B. Jayasundera, the sources said.
At these meetings it has been revealed that the earlier raising of the tax free income threshold per month from Rs. 27,000 to Rs. 50,000 and reducing of tax rate bands had resulted in a dramatic revenue fall of nearly 40 per cent to Rs. 4 billion from Rs.6.5 billion.
The number of tax liable employees has also fallen from 162,364 to 148,080 with these earlier tax-benefit measures.
However IRD officials argue that the proposal to bring down the tax free income threshold should be implemented from the next financial year as it is difficult to make necessary changes after the ending of first quarter of the tax assessment period this year.
They noted that the government will have to present an urgent finance bill in parliament to introduce the change soon as it is coming outside the purview of the 2013 budget.
The proposal, they added, could be implemented by including it in the 2014 budget which would be presented in November this year, seven months from now.
A salaried employee is taxed from Rs. 600,000 per annum and others from earnings of Rs. 500,000 a year at present. Sri Lanka, a country of over 20 million people, has 897,000 income tax payers, including 530,000 people who paid payroll taxes through pay as you earn (PAYE) deductions made by the employer.
Under Sri Lanka’s PAYE scheme a person with Rs. 100,000 per month income pays Rs. 2,333 a month, a person earning Rs. 150,000 pays Rs. 7,000 and an income of Rs. 200,000 is subject to a tax of Rs.14,000 a month.
Sri Lanka’s tax revenues are among the lowest in the region and the International Monetary Fund has advised the authorities to broaden the tax revenue base and adjust the rate structure to put mainly loss-making state institutions on a sustainable footing to boost economic growth, a senior government official said.
Follow @timesonlinelk
comments powered by Disqus