Data dump mooted
In the backdrop of discussions on digital public infrastructure and unique digital ID, it is important to create data warehouses where data is captured and stored for purposes of data analytics to support expanding the tax net, a top tax official said.
Nisreen Rehmanjee, Executive Vice President and head Of Corporate Finance Group Tax and Social Entrepreneurship of John Keells Group, told The Sunday Times Business on the sidelines of the recently held budget seminar organised by CA Sri Lanka that data on bank accounts, credit card spending vehicles purchases, foreign travel etc. will provide insights into the risk profiling of taxpayers or potential taxpayers.
It will allow data-driven action by the authorities who can then identify the large tax evaders with the captured data, she noted further.
“The investment in this type of an initiative will allow for a paradigm shift in the way we look at broadbasing the tax net rather than the small incremental changes that are being considered as of now,” she added.
Based on some studies done by multilateral agencies, Sri Lanka stands as one of the highest in terms of per capita tax collection from registered taxpayers in the region, Ms. Rehmanjee pointed out, noting that the same taxpayer population is being taxed at high rates on multiple fronts.
Tax evasion does exist but there are also taxpayers using their franchise to defend themselves against frivolous assessments by the authorities, she said. “In the context of good governance and transparency, the Inland Revenue Department should publish more data related to its operations. For example, how much tax is collected through self-assessment by taxpayers and how much is collected through assessments by the authorities. All interpretations of tax law applied by the officers should be published to ensure consistency of application across taxpayers. Even data such as how many appeals are held in favour of the taxpayer and how many against, by the Commissioner General of Inland Revenue or the Tax Appeals Commission are important insights for the tax paying public.”
She added that digitisation enables the collection of data, and data-driven policy initiatives are important to drive the right outcomes. “If we are trying to change the tax culture, the way we look at the tax administration etc. needs to change. It is important not only to collect data and analyse it but also publish it for the benefit of the public.”
According to senior economist Roshan Perera, Sri Lanka’s 2025 budget should focus on export-related proposals to meet its debt repayment obligations in four years. The risk of debt sustainability remains severe as the national debt-to-GDP ratio is projected to stay at 100 per cent by 2029. Despite the government’s commitment to remain within the IMF programme parametres, Ms. Perera stressed the need for economic growth to generate funds to fulfil debt commitments. The export target of US$19 billion is challenging, as it projects a growth rate from 11 per cent to 17 per cent. However, she welcomed the proposal to introduce a national tariff policy, remove import taxes on raw materials, and establish trade agreements and economic zones. Ms. Perera emphasised the importance of effective implementation to encourage foreign direct investment (FDI) and build foreign reserves.
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