In a recent report in The Sunday Times, the Inland Revenue (IR) Chief Mr S Angammana has spoken about the ‘professionals’, such as doctors, lawyers, architects, etc., and said that most of these people evade payment of tax on their income and only 165,000 individuals declare their income and pay tax. He pleaded to these people to respect their moral obligations towards the society and pay tax on a voluntary declaration [self-assessment declaration], at a time when the public services, such as national health, transport and education suffer heavily due to lack of funds.
According to the IR Chief these professionals do not keep a record of their income so that some form of effective mechanism is required to bring them under the government tax system. He suggested that regulatory bodies of the professionals should bring in some form of licensing system to regulate their business.
The Sri Lankan public is well aware that most professionals do not have any moral obligation to pay tax on their revenue and in almost all cases they demand their fees in cash from their clients. For instance, some lawyers and doctors who charge heavy fees from their clients simply take cash in hand and do not issue any receipt to their client, so that there is no record of the fee collected. It is a fact that in some cases certain lawyers charge millions of rupees as their fee, which are never declared for tax purposes.
It is observed that in Sri Lanka, unlike in the UK, there is no legal requirement that all professionals in their chosen field of practice should obtain an annual practicing certificate [which is only issued on payment of a substantial fee] from their respective regulatory body. And also there is no requirement that professionals should notify their clients in writing about full details about the fees [issue of receipt is mandatory] and their obligations to clients. There is no law or rule about the accepted mode of payment of fees, client’s rights and contact information of their professional bodies in the event the client want to make a formal complaint against the professional whose service is unsatisfactory and/or unprofessional. For instance, in the UK no fee can be accepted in cash, unless the fee is less than a nominal fee as prescribed in the respective regulatory body. And there is a requirement that all payments are required to be made by either a debit card, a credit card or a cheque [backed by cheque guarantee card issued by the respective bank]. And by law all cheques are account payee only and cannot be transferable. These checks are in place for a purpose; that is to ensure that all transactions are duly recorded, leaving no room for any kind of evasive action.
I cannot understand why the IR should rely on regulatory bodies of these professionals as they have already failed in their public duty to protect public from fraudster elements. As the professional bodies have failed in their overriding duty to protect the interests of the public the IR should not hesitate to take the necessary initiative to make sure that all money transactions by professionals are duly recorded and in the event of any failure is detected to charge the person concerned before the court of law. Where necessary, laws should be enacted to make sure that fraudsters are expelled from the practice of the respective profession.
In the UK, only in the profession of solicitors, every year not less than 200 members in the profession are charged and punished for various types of wrongdoings, such as misconduct, dishonesty etc., by the solicitor regulatory body. There, the regulatory bodies are very receptive and always make sure that overriding duty of the respective profession towards public is strictly observed by the members of the respective profession. How about the situation in Sri Lanka? How many professionals are charged and how many are removed from the practice of various professions? The most likely answer is not even a single member. I believe this fact itself is enough to determine the effectiveness of the professional bodies in their overriding duty to the public. In this kind of environment what the IR chief should do is not rely on the so-called professional bodies that is outside his purview but to rely on his own resources and bring in some effective mechanism to nab those who defy the law of the land.
If the IR chief takes the right action in the right direction, he need not go begging behind these so-called professionals. Instead, the revenue that is denied would effortlessly come to the government coffers.
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