New Inland Revenue Bill will ease burden of indirect taxes while enhancing direct taxation, says Finance Minister

 Finance and Mass Media Minister Mangala Samaraweera told Parliament today that the new Inland Revenue Bill  would help ease the burden of indirect taxes that is now heaped on  citizens by increasing the number of people who pay direct taxes to the state.

He said that the lopsided taxation system that was taxing the poor on the same level as those who are among the wealthiest in the country would be reversed   once the proposed law comes into operation.

  Staring the debate on the IR Bill, the Minister said that indirect taxes account for 80 percent of the tax revenue while only 20 per cent paid direct taxes but by 2020, the target is to bring the reduce the indirect taxes proportion to 60 percent while increasing revenue from direct taxes to 40 percent.

The minister said that the new provisions would come into effect in two phases. The provisions related to income taxes will come into effect from October 30, and the legislation will be fully implemented from April 1, 2018.

The Minister said parallel to this move, the Inland Revenue Department, Customs Department and the Excise Department would undergo a series of important modifications next year. He said the Government intends to introduce ‘a universal tax file number’ to every citizen over 18 years. However, he clarified that it no way means that every citizen over 18 years has to pay income taxes. “If you have no income, you can mention that. They will be entitled to a number of other privileges too,” he said.    

The Minister said the new IR Bill was based on four main concepts, “burden proportionate to ability to pay, certainty, convenience and efficiency of collection”, adding that Government hopes to achieve its revenue targets without burdening the low and middle income earning people. He said the new legislation has provided concessions and tax exemptions to Small and Medium Scale Entrepreneurs and many other needy sectors including the exports, agriculture, IT, education and tourism etc.      

Minister Samaraweera said the new law would create a level playing field for all and is in keeping with international best practices.

He added Sri Lanka is ranked number 158 out of 185 countries as per the ‘Ease of Paying Tax International Index’, adding that the country must strive to improve this to enhance investor confidence. 

(CK)