13 June 2024 07:40 am Views - 470
By Nishel Fernando
Despite the recent achievements in tax revenue, Sri Lanka’s target for the next two years still remains ambitious, with a limited number of tax policy options being available, an International Monetary Fund (IMF) official said.
“This is only the start. The targeted growth in 2024 and 2025 is still ambitious but slightly more moderating, as further tax policy options become little more limited and hard work to deliver results with administration and compliance sinks in,” IMF Resident Tax Administration Advisor to Inland Revenue Department (IRD) David Kloeden highlighted.
He noted that Sri Lanka is moving in the right direction, as the government was able to turnaround the tax revenue from unprecedented 7.3 percent of gross domestic product (GDP) in 2022 to 9.8 percent of GDP in 2023.
Kloeden shared these remarks at Sri Lanka’s First National Dialogue on Fair Taxation and Stronger Social Contract for Sustainable Development Goals, organised by the United Nations Development Programme, in Colombo, yesterday.
Under the IMF-backed programme, the government is targeting to increase the government revenue to 12.4 percent of GDP this year and to increase this to 15 percent and 15.7 percent of GDP in the coming two years.
In addition, the government is required to run a surplus of 2.3 percent of GDP on its primary fiscal balance from 2025 onwards, while maintaining a budget deficit below 5 percent from 2026 onwards.
Meanwhile, Finance Ministry Tax Policy Advisor Thanuja Perera outlined that the government is taking a number of measures to build tax morale, public trust and to build a stronger social contract to achieve these ambitious targets.
In particular, she noted that the government plans to widen the tax net by mandating multiple institutions and individuals sharing information with the Commissioner General of Inland Revenue, with full effect from July 1.
With the recent amendments to the IRD Act, she noted that the legal impediments have been removed for information sharing.
“With the recent amendments, spontaneous sharing of information is allowed with the IRD by certain government agencies such as the Register General Department, Motor Vehicle Department as well as the banks and financial institutions,” she added.
Once the Revenue Administration Management Information System (RAMIS) interface is ready, the information is to be incorporated into the RAMIS, to manage the tax risks effectively with the other revenue collection agencies.
Further, Perera noted that information would also be shared with the Financial Intelligence Unit, to address corruption and other issues.
However, she acknowledged that there still could arise administrative, intuitional, operational and political issues in implementing this information sharing system.