Web of corruption
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At a recent media conference discussing the non-payment of dues by liquor companies, a journalist posed a question why the authorities cannot take stern action to recover billions of rupees in unpaid dues from liquor companies, when they are quick to charge a small-time trader for selling a small item above the regulated price. The official response: “We are taking action to recover these payments.”The journalist asked again: “But why don’t you penalise them and quickly recover these monies instead of giving them time.”
The official said the only way to recover the monies was to give the companies a payment plan.
It is well known that Sri Lanka’s three main revenue earning agencies – the Inland Revenue Department (IRD) responsible for personal and corporate tax collection; the Customs for duties and import and export taxes; and the Excise Department for the collection of dues from liquor companies – are hotbeds for corruption.
This was the message that my friend Ruwanputha, the young economist, sought to discuss with me on Thursday morning. “I was watching a clip on the TV news the other day about the collection of taxes and other dues from liquor companies and wondered why it is so difficult to collect this revenue,” he said during an early morning call.
“Well….this is a recurring problem at many of the revenue earning agencies which are rampant with bribery and corruption,” I said.
“No government has been able to clean up the system and ensure an orderly, corruption-free collection process at these three revenue agencies,” he said.
“Maybe……the winning candidate at the presidential election might emerge with a mandate to reduce corruption and inefficiencies,” I said. “We hope it does,” he said, wistfully.
Accountant Janaka Tennakoon, in a recent article titled ‘Issues facing the Inland Revenue Department in tax collection’ appearing in our sister paper Daily FT, says that Sri Lanka’s tax collection issues are not solely due to economic policies but also systemic inefficiencies and corruption within the IRD.
He has suggested that implementing the full-scale digitalised Revenue Administration Management Information System (RAMIS) of the IRD connected to individual financial records could streamline processes and close existing loopholes. The RAMIS has been troubled by many issues and not working perfectly or working at all. Less paper work and going to government departments and engaging with government officials on payment of dues will eliminate many of the issues pertaining to bribery and corruption.
Before proceeding further I needed my morning tea and while walking to the kitchen I could hear the voices of the trio during their weekly chat under the margosa tree. The discussion was on elections.
“Okkoma deshapalana reli-wala godak kattiya innawa. Kohomada eh (All the political rallies have huge crowds. How is that possible)?” asked Serapina.
“Ah…….samaharunta pagawak denawa kaema parcel ekak saha bus kuliya. Pirimi kattiyata arrakku bothalayak (Well…..some people are bribed with lunch packets and bus fares. For the men a bottle of arrack,” said Kussi Amma Sera.
“Okkoma apekshakayo ehemada (Is every candidate doing this)?” asked Mabel Rasthiyadu.
“Okkoma nemae, samaharu witharai (Not all but some),” replied Kussi Amma Sera.
Bribery and corruption are a widespread phenomenon and difficult to erase off the face of the earth as it’s a persistent issue in many of the developing countries particularly in dealings with state agencies. Pay, under the table, to get some work done at a state agency, is the motto in many lower and middle income countries. In Sri Lanka, it is known as ‘santhosam’ (bribe) and widely practiced.
Like the journalist who asked the question as to why the small man is only penalised by the authorities when large-scale fraudsters escape the long arm of the law, big business and corrupt businessmen, in fact, own billions of rupees to state banks in loan repayments and officials are unwilling to take them to court to recover these monies because they are politically connected and know ‘big brother’ is looking after them to evade these payments.
Corruption and the rule of law are a rallying cry in the current presidential election campaign with candidates falling over each other in promising to end endless cycles of corruption and ensure that the rule of law applies to each and every citizen. But have we not heard these ‘determined’ cries before?
Some experts argue that digitisation of revenue earning state agencies like the IRD, Customs and Excise could minimise corruption to a large extent. This was also the expectation when the RAMIS system was introduced at the IRD but has failed to generate the required results. Is it sabotage against a system trying to eliminate corruption and minimise human contact in filing returns and making payments? Some people think so.
The Customs is also a hotbed of corruption and corrupt officials are hell-bent on stalling any attempt to digitise its operations, reduce paper work and minimise face-to-face contact.
A feature article laying out the need for a digitised system at the three revenue collecting agencies points out that “outdated, manual systems have become breeding grounds for corruption, where bribery and inefficiency rule, bleeding exporters dry and stifling economic growth. The country stands at a critical juncture, where the only viable path forward is the digitalisation of customs and trade operations. These antiquated, paper-based Customs processes are no match for the demands of the modern global economy, where speed, accuracy and transparency are paramount.”
Sean Van Dort, Chairman of the Sri Lanka Shippers’ Council, points out in the article (pertaining to the recent strike by Customs officials) that when Customs officers go on strike or adopt a go-slow approach, the repercussions are immediate and widespread. Importers face delays, leading to storage and demurrage charges that quickly accumulate. The lack of urgency and accountability among Customs officers exacerbates these issues. Without Key Performance Indicators or a robust system to monitor and track performance, inefficiencies persist unchecked, he said.
The solution to these deep-rooted issues lies in digital transformation, the article said.
Just as I was winding up the column, enjoying a mug of coffee prepared by Kussi Amma Sera, the familiar sound of the bicycle bell of the postman rang outside. “Ithin, mathiwaranaya
kohomada (So how is the election),” I asked warmly from my favourite and hard-working government servant, collecting yet another utility bill as revenue agencies are the only ones writing letters to us in the age of gmail and Internet. “Sir, kavuru
balayata avath, apey prashna visadenne nae. Okkoma ekai
(Sir, whoever comes to power, our problems won’t end. They are all the same),” he said, laughing but without any malice.
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