Finance State Minister Eran Wickramaratne and Finance and Mass Media Minister Mangala Samaraweera. Pic by Pradeep Dilrukshana
By Nishel Fernando
Sri Lanka’s Inland Revenue Department (IRD) has opened 49,000 new tax files in April with the new Inland Revenue Act coming into force, Finance and Mass Media Minister Mangala Samaraweera revealed on Tuesday.
Addressing a special press conference, which coincidentally marked the completion of one year in his current position, Samaraweera noted that the government’s tax revenue base has been on a growing trend as the public are coming to terms with their responsibilities.
Speaking to Mirror Business, IRD Commissioner General Ivan Dissanayake said the IRD has set a target to open 250,000 new tax files this year.
Dissanayake further said the new tax files were opened based on the information gathered during the February to March period.
“We haven’t estimated the income yet. They have time to make the payment until September 2019. However, we are expecting some payments from the new files this year,” Dissanayake said.
“The public have understood their responsibilities and have come forward voluntarily to pay their due taxes,” he added.
Meanwhile, Samaraweera vowed to increase the expenditure on education and health to 6 percent of gross domestic product (GDP) by 2025 and 3.5 percent of GDP over the next couple of years.
He pointed out that the Yahapalana government has been steadily increasing expenditure on education, health and housing since it came to power in 2015.
“Despite many challenges, the Yahaplana government increased the expenditure on education to Rs.257 billion in 2017, from Rs.190 billion in 2014. The expenditure on health has been increased to Rs.197 billion, from Rs.138, while the expenditure on housing has sharply increased to Rs.274 billion, from Rs.174 billion.”
The minister revealed that the ‘Enterprise Sri Lanka’ loan scheme would be launched on June 27 and the Enterprise Sri Lanka exhibition would kicked off in Embilipitiya in August, while the groundbreaking ‘Gamperaliya’ rural development programme is also set to be launched in August. Meanwhile, Samaraweera accused former President Mahinda Rajapaksa and his followers of spreading fake news on the economy, cost of living and debt situation, following Goebbels’ ‘Big Lie Theory’.
Samaraweera asserted that the government has set a solid foundation for a stronger economy, referring to several economic indicators.
“The government’s tax revenue has increased to 12.6 percent of GDP, from 10.3 percent; the government’s revenue has increased to 13.8 percent of GDP, from 12.6 percent, while the government managed to retain the expenditure at 19.4 percent of GDP and 5 percent of government investments.”
“A primary account surplus was recorded last year since 1992. We are expecting that the surplus will further increase in the midterm. We believe there will be a surplus in the current account this year. Accordingly, we will be able to cover all recurring expenditures through the government revenue,” he said.
Samaraweera noted that the debt to GDP ratio has fallen to 77.6 percent in 2017, from 78.8 in 2016 and the government is in the process of paying off the loans taken by the former regime for the next 12 years. He accused the former president of fabricating the real debt scenario of the country to the public.
Samaraweera challenged Rajapaksa to face him as the former finance minister in a public debate to discuss and settle the debt issue once and for all. According to him, the government will have to pay off Rs.11.4 trillion worth of loans acquired mostly by the past regime. He stressed that almost half of the loans acquired by the present government were for the interest payments for the loans acquired prior to 2015.
Despite the criticism levelled against the current government, Samaraweera stated that the expenditure on Samurdhi and other transfer payment programmes for underprivileged communities has been increased to 3.4 percent of GDP, from 3.1 percent and the government also was able to increase the salaries of the state employees in 2015 by Rs.10,000, which was the first salary increase since 2006.
“When the Rs.10,000 salary increase is converted according to 2014, it’s a 107 percent increase in January 2020,” he said.
Speaking of the cost of living, Samaraweera insisted that the cost of living has not exceeded the 2014 levels while adding that the income levels of the citizens have increased steadily during the period as Sri Lanka became an upper-middle country in 2017, reaching US $ 4,065 in per capita income.
Mangala reconfirms Ranel Wijesinha’s SEC appointment
Samaraweera yesterday once again confirmed the appointment of senior professional Ranel Wijesinha as the Securities and Exchange Commission (SEC) Chairman.
“I think he will be appointed in a day or two,” Samaraweera stressed.
There were rumours that Wijesingha’s appointment has been blocked at Presidential Secretariat level. However, Samaraweera dismissed such speculations.
“…usually we have to refer the new appointments to the Presidential Secretariat. It’s just a procedural delay, that’s all,” he said.
The SEC has been without a chairman and a commission since January 25, with the ending of the term of the commission led by Thilak Karunaratne.
Govt. may change PAYE tax formula
The government is in discussion to change the formula for the advance income tax deduction from salaries, following the increased Pay As You Earn (PAYE) tax, including the allowances introduced by the new Inland Revenue Act.
“We have found that some people get more non-cash benefits than cash payments. In certain instances, their salaries are not enough to deduct the PAYE tax.
In those circumstances, we have made little changes, so that it’s comfortable for accountants to deduct the PAYE tax from the salaries,” Inland Revenue Department (IRD) Commissioner General Ivan Dissanayake said.
In addition, Dissanayake said that the IRD also proposed to reduce the 10 percent withholding tax on rent income to 5 percent.
Speaking to Mirror Business, National Policies and Economic Affairs State Minister Dr. Harsha de Silva said the proposals are currently being discussed and no final decision been taken.
He said the Finance and Mass Media Ministry is expected to release a new circular on the PAYE tax, shortly.