ECONOMYNEXT – Sri Lanka’s Acting Finance Minister Shehan Semasinghe hopes for higher tax revenue when the Revenue Administration Management Information System (RAMIS) is upgraded to eliminate the contacts between the tax payers and administrators.
RAMIS was introduced when the island nation signed for the 16th IMF loan in 2016. However, trade unions in the Inland Revenue Department (IRD) had warned the system was malfunctioning despite billions being spent for it.
Finance Ministry officials say IRD employees had been resisting the RAMIS because it prevents direct interactions with taxpayers and possible bribes for defaulting or under paying taxes.
The island nation is struggling to boost its revenue in line with the target it has committed to the IMF in return of a $3 billion loan programme to come out of an unprecedented economic crisis.
The IMF has estimated a revenue fall of 15 percent this year from the ambitious target of 3.1 trillion rupees. The government is on the process to somehow achieve the target with the IMF has yet to finalize the second tranche of the $3 billion loan.
“The RAMIS system will be upgraded within the next few weeks. So, I don’t think there will be a physical interaction between the taxpayers and tax administrators,” Semasinghe told reporters at a media briefing on Thursday (28).
“This has to be an independent system. When there is room for physical discussion between the taxpayers and tax administrators, there could be room for errors. So now we are eliminating all room for errors.”
The island nation’s revenue fell to as low as below 8.5 percent of the GDP in 2021 after former president Gotabaya Rajapaksa slashed the taxes soon after he won the presidency in November 2019. Many economists saw the move as a politically motivated strategy to win the 2020 general election.
Rajapaksa secured a near-two third majority in the 2020 general election but was forced to flee the country amid massive protest by the public after the economic crisis hit the ground with lower revenue and higher government expenditure.
President Ranil Wickremesinghe government since July last year has implemented some tough reforms amid strong protests by opposition and public.
Wickremesinghe, also the finance minister has targeted to increase this year’s government revenue to 10.3 percent of the GDP. (Colombo/September 28/2023)