‘Tax rupees at work’
View(s):Some years ago, readers may recall there was a notice, “Your tax rupees at work” at many road works undertaken by the government with World Bank assistance.
It was meant to explain to the public how the tax money collected from the public was put to good use by the authorities.
I was reminded of this during a conversation on Thursday morning with know-all neighbour Haramanis of broken English fame. Waking me up at 6.30 a.m. (I was sleeping like a log), he sought a discussion on an ‘important matter’.
Drowsily answering the phone, I asked: “Who is this?” annoyed at the call at this ungodly hour. “Hello, hello, it’s me Haramanis.”
I calmed down instantly because I relished speaking to Haramanis with his broken English. “I shay … I read an interesting letter in the newspapers on taxes,” he said.
“When was this reported,” I asked, to which he gave the date. “Hold on,” I said and quickly rummaged through my pile of newspapers and came across the letter. “The letter writer is questioning whether the public should pay taxes when it is spent on unnecessary things,” Haramanis said.
The letter in our sister paper Daily Mirror by a reader, Joseph A. Nihal Perera, was titled, “Should people pay taxes?”
The letter raised an important issue – when people are taxed in all forms, don’t they have a right to know what the government is doing with their tax money?
“In a democracy, isn’t it an obligation of the government to give a clear breakdown of how the people’s taxed money has been utilised? Such a breakdown should be made available to the public annually, subject to a government audit. This breakdown should be made in an easy to comprehend manner and be precise too. If such a breakdown is not made available to the tax-paying public, can it be construed as a violation of a fundamental right? In such a situation why should the people continue to pay taxes to the government?” asked Mr. Perera.
The letter is significant as it connects to the issues raised during campaigning at the presidential election. By the time this column appears on Sunday, the winner of Saturday’s presidential election would be known unless no candidate gets more than 50 per cent of the vote and a second count of the preferences would mean that the result would be known only on Monday.
Mr. Perera raises an interesting point on the need for transparency of the work undertaken with the tax money collected from the people. How is this money used: Is it spent wisely; does it go into the pockets of unscrupulous politicians and corrupt politicians; and do people have a say in how this money is spent?
What if someone refuses to pay income taxes and petitions court seeking an order under fundamental rights demanding that it is his/her right to know in detail how the tax money is spent, on what projects, for whom, etc? That would make an interesting case and draw public attention.
While conversing with Haramanis, I could hear the song ‘Kussi Amma Sera’ coming from our very own Kussi Amma Sera’s pocket radio which she had with her while having her morning chat under the margosa tree with Mabel Rasthiyadu and Serapina.
I could hear the lyrics..……“Kussi amma Sera had a fight with one Perera, home people don’t know what-to-do. Aney mage Nona, mata gamata yanna ona, mage masa deke padiya denna ko (Aiyo Madam, please give me my two-months’ salary as I want to go to my village),” blaring from the pocket radio.
“Monawa weida (what will happen at the elections)?” asked Serapina, with the immediate reply from Mabel Rasthiyadu: “Danne naha oyi (I don’t know).”
“Mama prarthana karanava apita avanka nayakayek labei kiyala (I wish for an honest leader),” interjected Kussi Amma Sera.
Listening to snippets of their conversation (and silently agreeing with Kussi Amma Sera’s wish), I returned to the conversation with Haramanis and we discussed many things, election-related and non-election related.
To get an idea of how much tax is collected from the people and what the government’s expenditure is, I rummaged through government sites on the Internet for public information. These are the figures I came across.
Tax revenue in 2014 was Rs. 752,180 million; in 2015 – Rs. 888,242 million; 2016 – Rs. 1,067,317 million; 2017 — Rs. 1,527,154 million; 2018 – Rs.1,587,458 million; but seen dropping in 2019 (estimated) – Rs. 1,240,942 million.
On the expenditure side it was: Expenditure in 2014 – Rs. 1,326,694 million; 2015 – Rs. 1,532,544 million; 2016 – Rs. 1,686,002; 2017 – Rs. 2,293,192 million; 2018 – Rs. 2,499,550 million; and 2019 (estimated) – Rs. 3,149,000 million.
It shows that while tax revenue has doubled from 2014 to 2018 (it is falling in 2019 due to the 53-day governance crisis in November-December 2018), government spending has risen by three times during this period. So, as Mr. Perera’s letter suggests, what has this money been spent on? He rightly asks that in today’s world of accountability and transparency, the public should be given a checklist of items the tax money is spent on.
However, no government will do this willingly since there is widespread corruption in the way government agencies work and part of the money is pocketed by politicians and officials, while also being spent on unnecessary things. But the people have a right to know, stresses Mr. Perera.
Another factor to note is that tax revenue is hardly enough to meet government spending and pay off loans. It is not even enough to pay the total debt. For example, tax revenue in 2018 was Rs.1.6 trillion while debt repayment that year was Rs. 1.9 trillion. So where is the money to fund government spending and pay off debts? Borrowing… borrowing… and borrowing..….from local and international sources. And as this vicious cycle of spending continues, the tax burden on the people also increases.
During the presidential election campaigns, the two front runners – Gotabaya Rajapaksa and Sajith Premadasa liberally sprinkled goodies and freebies on the people, promising tax breaks, incentives, subsidies and grandiose projects. If all this is eventually provided by the winning candidate, Sri Lanka’s debt payments will shoot through the sky!
And given the promises of transparency, one hopes that the winning candidate will explain lucidly and in easy-to-understand terms how these promises will be financed.
Deep in thought at my computer, I was brought back to earth by Serapina humming the song ‘Kussi Amma Sera’ as she brought my second cup of tea. “Wede ivarada (Have you finished)?”
“Almost,” I said and thanked her for the tea, wishfully hoping that the new leader will make Sri Lanka an ‘El Dorado’ instead of going down the ‘path of no return’ in terms of the burgeoning debt burden.