The Ministership of Tax Collection, to Mahindananda

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It has been proposed to form a new ministry including Income Tax Department, Excise Department, and Customs. Further, the hair-raising speech made by Mahindananda at the parliament about tax compliance has a connection with this proposal.

Mahindananda’s speech explained how businessmen avoid paying taxes. Further stated,  Although there are 22 million people in Sri Lanka, there are only 132 people who pay more than 5 million taxes per year. He said that there are only 665 people/entities pay a significant amount of tax. He revealed that the generally poor and the rich pay the same amount of tax.

Sri Lanka has a welfare economy. It has an expenditure of almost three times the government’s income. Yesterday, Bandula Gunagunawardena said that there is no money to pay the salaries of government employees. Further, said Rs 15 billion lying as pending payments to suppliers.

Previously government expenditure was managed by printing money and borrowing. But IMF conditions have to stop printing money. Due to the bankruptcy of the country, it is not possible to borrow. For this reason, the government has to launch an operation to increase its income

Almost 80% of government revenue in all countries of the world comes from taxes. Now The only option for Sri Lanka is to increase the tax revenue. The only way to do that is to increase direct taxes.

Taxes are 2 categories as direct taxes and indirect taxes. Direct taxes are taxes such as income taxes that are imposed only on a specific group of people. The imposition of direct taxes does not affect the price of goods in the country. Indirect taxes are taxes like GST that are imposed on all people. The imposition of this tax causes the price of goods to increase.

For this reason, direct taxation of a country should increase and indirect taxation should decrease.

During 2015-2017, Sri Lanka’s direct tax revenue increased from 8% to 15.2%. Also, during that time, indirect taxes were reduced and the price of goods was reduced. This fact influenced Finance Minister Ravi Karunanayake to be awarded as the best finance minister in the Asia Pacific region.

After Ravi, the method of increasing government revenue by imposing direct taxes did not go forward. But now it has become a mandatory factor to run the country

On the previous king’s day, there was a minister who collected taxes for the treasury. The title is mentioned in the inscriptions as ‘Badakarika’.

Mahindananda previously had a debt collection tenure in a finance company. For this reason, the attention of Ranil and the Rajapaksas has been focused on assigning him the responsibility related to the collection of income tax by creating a new mechanism.