Sri Lanka’s controversial ministerial tax snoop clause defended
ECONOMYNEXT – Although Sri Lanka’s finance minister has been given the power to see tax files of citizens, the new tax law has the necessary checks and balances to prevent its abuse, State Minister of Finance Eran Wickramaratne said.
Opposition members had questioned the finance minister’s power under the new law when it was debated and passed by parliament last week, he told a forum on Sri Lanka’s new ‘Inland Revenue Act’ organized by the Ceylon Chamber of Commerce.
“The new bill increases certainty – we have gone for a rule-based process,” Wickramaratne said. “You don’t need to sit outside the room of the finance minister anymore.”
The new law takes away the discretion from political authority, but the finance minister has the power to see tax files.
The ability to snoop on tax files on citizens is likely to be used against political opponents, Sunil Handunetthi, a legislator from Sri Lanka’s Janatha Vumukthi Peranmuna, warned in parliament.
"This is not about (current finance minister) Mangala Samaraweera, it is about the minister in charge of the finance portfolio," Handunetti said. "He can now take the file of any political opponent. For anyone making an open tax declaration, a question arises about how the minister will use the information."
Sri Lanka has a recent history in 2015 of slapping so-called ‘revenge taxes’, which shows the elected ruling class in general cannot be trusted to respect the justice of property right of all citizens, freedom advocates say.
That measure to inspect files was to ensure the minister can monitor the efficiency of the Inland Revenue Department, Wickramaratne said.
"If you go beyond the stipulated powers and use information for other purposes, there are clauses in the Bill for punishment – a sentence of not less than 1 million rupees and not less than one-year imprisonment. We have put in the checks and balances. We are going to a more rules-based society."
However, Handunetti warned that such a measure had never been in an income tax law in the country and should be removed.
Wickramaratne said the country was emerging from an era where the supremacy of the law was neglected. “Laws were there but application of the law was wanting,” he said. “That era is over and the law will apply to everybody equally.”
(COLOMBO, September 12, 2017)