Effectiveness of tax collection tied to people’s willingness

Optimising the financing streams across the private and public sectors is key for Sri Lanka’s journey to sustainably recover from its economic crisis, United Nations Development Programme Sri Lanka Resident Representative Azusa Kubota said. 
From the revenue-based fiscal consolidation measures put forth by the International Monetary Fund reform programme, Kubota stressed that the government is strongly encouraged to bolster tax revenue. 
“The effectiveness of tax collection is fundamentally tied to the people’s willingness to comply with the tax obligations. People are willing to pay taxes only as long as they value what they gain from it,” said Kubota.

She noted that this underscores the importance of addressing perceptions, structural deficiencies, misinformation and misconduct, in order to boost the tax morale. 
Kubota shared her views while addressing Sri Lanka’s first national dialogue on fair taxation.
Noting that Sri Lanka’s economic crisis offers a holistic opportunity to optimise the use of resources for the Sustainable Development Goal (SDG) attainment, she stressed the need for the island nation to move decisively into an economic transition, which has the SDG-aligned taxation at the heart of it. 
Building upon Kubota’s points, State Minister Finance Shehan Semasinghe echoed the concerns regarding the negative perceptions impacting the tax morale and compliance.
He pointed out that the adverse perceptions relating to fairness and usage of public funds would almost certainly result in weak tax morale, which in turn typically translates into weaker compliance. 
“This could easily slip into a vicious cycle of non-compliance,” cautioned Semasinghe.
Accordingly, he noted that it is important that the public has confidence in the mechanisms and processes that are in place for the formulation of tax policy. 
Semasinghe went on to acknowledge that the governments have not always been very effective at communicating such matters and that is an area for improvement.
“It is clear that the governments must pay significant attention to taxpayer perceptions and work towards improving tax administration and tax compliance measures,” he said.