By Favoured Tax Dodgers and Government Failures in Sri Lanka
Parliament Unhappy with Tax Collection Failures
This week, a small news item revealed that Sri Lanka’s Parliament Committee on Ways and Means is very unhappy with the Excise Department. The Department failed to collect 1.8 billion rupees in taxes for 2023 from the country’s top four distilleries by the June 30, 2024 deadline.
Committee’s Frustration
Politicians on the Committee, who are trying to gain public favor before elections, sternly reminded the Excise Department to follow their orders and collect the overdue taxes. Excise officials claimed they had written to the Ministry of Finance about conflicts between the Committee’s orders and existing agreements, but they had not received any reply.
Suspension of Licenses Ordered
The Committee has instructed the Ministry of Finance to suspend the licenses of alcohol producers who haven’t paid their taxes for 2023. This issue of defaulting distilleries is not new, with previous instances such as in November 2023 when distillery licenses were suspended for non-payment.
Selective Tax Enforcement
The big question is why the Ministry of Finance is lenient with a few favored companies, while ordinary citizens face heavy tax burdens. Many people in Sri Lanka are already struggling, with one in four living below the poverty line. This selective enforcement of tax laws raises serious concerns.
Government’s Financial Management Issues
The Treasury Secretary recently informed the President that meeting the demands of striking public servants would require increasing the value-added tax from 18% to 20-23%. This highlights the government’s ongoing financial challenges. However, the government’s failure to collect taxes from wealthy distilleries and other corrupt practices undermines its credibility.
More Financial Mismanagement
Another example of financial mismanagement is the controversial decision to award a global consortium the contract to process online visa services without competitive bidding. This deal, approved by the Cabinet, led to significant financial losses. The Committee on Public Finance has recommended canceling or revising this award and conducting a thorough audit.
A Call for Accountability
These incidents demand that the government explain its failures in financial accountability. Without such explanations, the public will view the government’s promises as mere political performances. Meanwhile, the police and politicians continue to skillfully navigate around laws and the Constitution, leaving the public skeptical and angry.
