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Business

On VAT delays and why pay taxes at all!
In its April budget, the government said it would enforce a new Value-added Tax (VAT) to replace the goods and services tax and the defence levy by June.

But this widely awaited tax was put off for July and as our story on page one of the Business section suggests the Tax Department is awaiting the go ahead from the government in the form of legislation to make it effective.

No department including the office of the Commissioner-General of Inland Revenue is prepared to provide details of the tax or how it works. "I can't say anything until the legislation is passed," the Commissioner-General said in response to our query. Now that's puzzling given this talk of transparency and a tax that should have been enforced by June.

Isn't it the right of the business community to be provided with more details of this tax so that they could get their act together in terms of implementation and cash collection. Lots of things have to be done by the trade in the implementation process like new accounting procedures and it's only fair that adequate time is given for this exercise.

No one in the government has a clue about how the tax works, or they are not simply saying it. This newspaper was sent from pillar to post in the Finance Ministry to get some response as to how and when this tax would come into force. "Please ask ...," was the stock response we got from officials.

On the subject of taxes, there was an interesting discussion the other day on a local television station between the TV presenter and a deputy minister. Told about complaints of a new tax on interest income on deposits, which would affect pensioners, the deputy minister suggested that depositors could avoid the tax by breaking up their deposits!

A sound suggestion of tax evasion coming from a deputy minister which no doubt many investors would follow. But that's not sound advice coming from an individual, particularly a deputy minister in the government.

Tax collection is essential for a government to meet its spending needs. Already, only a few people pay their taxes while the big fish get away scot-free due to an inefficient system that fails to catch those who dodge taxes.

Often, people look for loopholes to avoid paying taxes and the more tax credits one could get, the better. If everyone starts looking for tax breaks and succeeds, from where would the government get its revenue?

Talk to any tax lawyer or consultant and he would find a way of cutting his client's tax bill or making sure he simply doesn't pay taxes at all. Isn't it the duty of every able person to pay taxes?

If ministers are themselves suggesting ways of avoiding taxes, the system must stink!

But, why pay taxes at all. Taxes are needed for government spending on development, maintenance of public utilities like health services, transport and post offices, garbage collection and a whole set of services to the business community and the people.

Are these services efficient? Is your garbage collected on time or at all? The area that comes under the Dehiwela-Mount Lavinia municipality stinks with garbage not collected for days. It is the same in other areas. Aren't we paying for these services through taxes? How about the way officials treat ratepayers who call over at a municipality or government office to pay power, telephone or water bills? Are they treated courteously?

Rarely does one comes across an official who smiles and is helpful. These officials are paid through income from government taxes which come from our pockets - something officials just don't seem to realise. They - just like our "charming and helpful" politicians - are surviving on the taxpayers' money. But do they serve the people?

So why pay taxes for services the community doesn't get? Furthermore, if deputy ministers in the government are themselves suggesting ways of avoiding taxes, something is wrong in the way governments tax the people. Changes are needed and radical ones at that.

The people should be paying taxes for services properly rendered by the government.

If that is not possible, a change is necessary in the tax system where every citizen in the community happily pays a tax for services because it is properly delivered - instead of grumbling over tax payments or going to extreme lengths to avoid taxes!

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