Sri Lanka Inland Revenue bill passed in parliament
Sep 07, 2017 17:45 PM GMT+0530 | 1 Comment(s)
ECONOMYNEXT - A new Inland Revenue law which removes exemptions and is aimed at extracting more income tax from the people has passed in parliament with 90 voting for and 25 against in the third reading.
In the first reading there were 100 votes for and 41 against, but during the somewhat exhausting committee stage where amendments, some members had decided to call it a day, the numbers show.
The income tax law is aimed at expanding direct taxes on capital and savings and eventually reducing indirect taxes.
Unlike indirect taxes such as value added tax takes away a proportionate amount such as 15 percent from people when they spend, direct or income taxes, tax savings and investible capital, undermining future investments and job creation.
Several countries in the Middle East which do not have income tax, have created employment many times the population, giving jobs to millions of people in countries with income tax such as Sri Lanka, India, Bangladesh and even, UK.
The money collected by the state through income taxes is frittered away in salaries of state workers, subsidies or other vote buying exercies. In 2015 Sri Lanka's finances were thrown into disarray after the new administration hike state worker salaries by 40 percent and increased subsidies, requiring more taxes.
However raising taxes is better than printing money to finance state spending, which leads to currency collapse and infaltion. The rupee collapsed from 131 to 152 to the US dollar after the 2015 budget.
In committee stage amendments, a number of changes proposed by sections of society and political parties were incorporated.
Finance Minister Mangala Samaraweera decline to delete a section which allows foreign authorities to request income tax details of citizens. There was also a section where the minister can compel groups of people or classes to file.
Religious organization who got wealth through Royal grants before 1815 would be free of tax, provided the profits were used for charitable purposes.
A request to conduct the committee stage next week made by the Janatha Vimukthi Peramuna was denied by the Finance Minister.
However he said if there were any pressing requirement, amendments could be moved after the budget, which was received with scepticism by JVP leader Anura Dissanayake.
Most amendments suggested by several parties and stakeholders have already been incorporated, Samaraweera said. (Colombo/Sept09/2017)