Delay in approving 3 finance bills causes Rs. 56 billion loss in state tax revenue
Fears that three crucial finance bills enabling the imposition of the controversial Super Gain Tax (SGT), Mansion Tax and a casino levy, would be defeated in parliament has delayed its presentation and led to a possible loss of Rs. 54 billion in estimate tax revenue.
These bills are meant to make effective these crucial levies presented in the February 7 budget. Four months later the bills are yet to be presented, though ready, for approval owing to fears that the result in parliament would be similar to a bill raising the threshold of the Treasury bill borrowing limit, which was presented to parliament in April, and defeated by a majority vote from the opposition.
Finance Minister Ravi Karunanayake told the Business Times that the opposition is blocking the Government’s innovative measures to increase revenues via introducing the mansion tax and taxes on casinos and taverns as well as the SGT.
Gajma Tax Consultant Senior Partner, N. R. Gajendran told the Business Times that finance bills necessary to implement tax proposals of the budget should be tabled in Parliament two weeks before votes are taken for them. There should be time to take legal action for anyone who objects to the amendments. It should be passed in parliament to make these new tax collections a law, he said adding that if it cannot be legalised during the current fiscal year, then it could be included in the next budget for the implementation with retrospective effect. However, he added that the targeted revenue for the current fiscal year cannot be collected without passing those finance bills in parliament.
There has been a strong lobby from the business community against the SGT imposed on companies. Over 20 companies listed at the Colombo Stock Exchange would be badly affected by this tax, a Managing Director of a leading conglomerate, said.
The SGT in a one off payment where a company or individual who has earned profits over Rs. 2 billion in the tax year 2013/14 will be liable to pay 25 per cent of their profit as tax.
Since some of these companies have already paid a tax of 28 per cent, the added 25 per cent would be 53 per cent and it needs clarification, he added. The Rs. 1 million ‘mansion tax’ to be collected from owners of large houses will have to be paid in four installments, under proposed changes to the country’s tax laws. The budget also imposed an Rs.1 billion levy on all casino operators, to have been paid before 15 April 2015 as a one off payment (special levy).