‘Parliament amended law to favour tax defaulters, with defaulter being able to drag appealing process for 15 years’

By Shamindra Ferdinando

Chairman of Sectoral Oversight Committee on National Economic and Physical Plans Mahindananda Aluthgamage yesterday (05) said that he intended to utilise Anti-Corruption Act No 09 of 2023 against top government revenue officials who neglected their responsibilities.

The former minister said so when The Island asked him as to what specific measures were being contemplated in the New Year to compel Inland Revenue Department (IRD), Customs and Excise Department to meet the revenue targets.

Kandy District lawmaker Aluthgamage said that increased revenue last year, following repeated interventions made by Parliament, revealed that revenue collection systems/procedures had been corrupted to the core. Regardless of who wielded political power at any given time, the system favoured the tax defaulters and in turn also benefitted corrupt officials to look the other way, the SLPPer said.

The utterly flawed and corrupt system had been put in place by Parliament that, over the years, amended relevant laws at the behest of the Finance Ministry, the ex-Minister said. The bottom line is those responsible for revenue collection brazenly represented the interests of big business regardless of the consequences, MP Aluthgamage said.

The new Anti-Corruption Act came into operation on Sept 15, 2023. Lawmaker Aluthgamage said that there were specific provisions in it to deal with negligent and corrupt officials.

The enactment of the new law automatically repealed the Bribery Act (Chapter 26), the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) Act No 19 of 1994 and the Declaration of Assets and Liabilities Law No 01 of 1975.

Responding to another query, MP Aluthgamage emphasized that in spite of improvement in revenue collection last year the need to establish a powerful revenue authority to monitor and regulate the three state income collecting bodies couldn’t be forgotten.

In addition, the Department of Motor Traffic, too, should be placed under close watch as it was riddled with corruption, the MP said.

The parliamentarian added that the failure on the part of successive governments to implement the Revenue Administration Management Information System (RAMIS), acquired from Singapore at a colossal cost, was yet to be fully functional. “The officialdom is bent on continuing with flawed systems for obvious reasons,” the ex-Minister said.

The vast majority of people, struggling to make ends meet, hated the new tax regime due to uncollected taxes, penalties and interests from those who could pay amounted to as much as Rs 1,000 bn by Dec 31, 2023.

MP Aluthgamage said that he strongly believed that corrupt officials should be dealt in terms of the new Anti-Corruption Act by the CIABOC.

President Ranil Wickremesinghe on Dec 21, 2023, appointed W. M. N. P. Iddawala, former Judge of the Court of Appeal and Deputy Secretary General of Parliament, as the new Chairman. Bernard Rajapakse, former Senior Deputy General Manager of the People’s Bank, and Chethiya Goonesekera, PC and Additional Solicitor General of the Attorney General’s Department, were the other members of the Commission.

The new team replaced Justice Eva Wanasundera (Chairperson), Justice Deepali Wijesundera and retired DIG Chandra Nimal Wakishta who once served as the head of State Intelligence Service (SIS). However, retired Justice W.K.D. Wijeratne remains the Director General, CIABOC.

MP Aluthgamage stressed that the recovery of unpaid taxes, penalties and fines was as important as expanding the tax base in line with the government overall strategy meant to strengthen the economy. That was one of the major IMF conditions the government had no option but to address, MP Aluthgamage said, urging political parties not to undermine government efforts.

Addressing the media at the Presidential Media Division (PMD) in late Sept 2023, MP Aluthgamage charged that incompetence and corruption at the three main revenue gathering bodies caused the government significant losses. He estimated the annual losses at approximately Rs 500 bn, with Customs being the main culprit responsible for failing to collect as much as Rs 360 bn.

The lawmaker said that those under a cloud over losses caused to the government could challenge him if they felt his assessments weren’t accurate. The one-time SLFPer said that though ill-fated political decisions caused the rapid deterioration of the economy during President Gotabaya Rajapaksa’s presidency, no one could deny the despicable role played by revenue collecting bodies.

The MP alleged that politicians and officials had colluded with the big business to amend the relevant laws to prolong the appeal process. That was the primary tool used by the interested parties, the former minister said, adding that the Parliament couldn’t absolve itself of the responsibility for this pathetic state of affairs.

Aluthgamage said that he told President Wickremesinghe that PAYE (Pay as You Earn) tax was not required at all if the government ensured proper collection of taxes.