Financial Times

Revenue authority a waste
The previous regime's proposed revenue authority that was touted as being the answer to the declining trend in revenue and increasing the state's collection but was scrapped by the new government, appears to have been a white elephant.

The government had spent over Rs 40 million on setting up and maintaining the authority since June 2003 although it had not earned one extra cent, said S.B. Divaratne, deputy secretary to the Treasury.

He said it had been a "futile exercise" that had met with resistance from staff in existing government revenue collecting departments which now were to be revamped and made more effective.

The money spent on the proposed revenue authority, which also consisted of the tariff commission, had gone for rent, furniture and salaries of staff and advisors who were paid higher than public servants, Divaratne said.

The authority was supposed to replace the Customs Department, Excise Department and Inland Revenue Department but was strongly opposed by trade unions in these organisations.

The new government has said it plans to modernise the Department of Inland Revenue and other agencies to increase revenue collection which had been on the decline in recent years. State revenue had fallen sharply to 14 percent of Gross Domestic Product from 19 percent in 1980.

A scheme to recognise and reward good tax payers is being worked out, Divaratne also said. It was being discussed by a steering committee consisting of senior Inland Revenue officials and trade union leaders and is likely to be included in the next budget.

Lal Udayasiri, secretary of the Inland Revenue Service Union, said one of the proposals being considered is to give good tax payers a 'gold card' that would entitle them to preferential treatment in services such as banking or for businessmen to get imports cleared.

This was being done with the aim of creating a "new tax culture" and to educate tax payers. "We can recognise good tax payers in our effort to widen the tax base so that the government would not have to burden the people with new taxes or by raising taxes," Udayasiri said.

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