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Trade union predicts revenue loss from GST

27 Jan 2022

  • Says establishing separate unit for GST collection in Treasury will be a failure
  • Treasury to give union a date to discuss their grievances
    By Shenal Fernando The Trade Union Collective of the Inland Revenue Department (IRD) is of the view that the transfer of the IRD’s tax-collecting responsibilities to a unit within the Treasury under the Special Goods and Services Tax (GST) draft bill, is an experiment by the Government which will fail and result in the country making a further loss of tax revenue.  IRD Trade Union Collective Executive Assistant H.A.L. Udayasiri stated that this transfer of the tax-collecting responsibilities of the IRD to a unit within the Treasury under the Special GST draft bill is an experiment by this Government which will ensure that the even current tax revenue levels will be lost. “If the Government continues in its attempt to pass this draft bill, we will engage in strike action,” Udayasiri warned. He added that the tax reforms brought about by the current Government have resulted in the IRD suffering losses of over Rs. 600 billion in 2020, which had been further exacerbated in 2021, leading to losses of over Rs. 700 billion. He further claimed that the money currently being printed by the Government is to compensate for such lost revenue and that as a result, the prices of goods and services have skyrocketed. He further claimed that the responsibility for the destruction of the economy must be borne by the Government. “We are agitating to force the Government to revoke this draft bill. However, so far, the Government appears to be ignoring this situation because so far none of the IRD trade unions have been given the opportunity to be heard,” stressed Udayasiri. Speaking to The Morning Business, IRD Commissioner General H.M.W.C. Bandara stated: “Currently there are three tax collectors in Sri Lanka, the Excise Department, Customs, and the Inland Revenue Department. Under this bill, the Government has established a unit within the Finance Ministry that will be collecting the tax relating to these five items. The concern of the trade unions is that the Government will continue to take away their tax-collecting responsibilities one by one through subsequent gazette notifications.”  He further stated that so far, the trade unions have not been given the opportunity to be heard by the Finance Ministry. However, the Ministry had informed that a date will be given for the trade unions to present their grievances by tomorrow (28).  The employees of the IRD have been protesting for the past few days against this new Special GST draft bill which will impose a single Special GST on telecommunication, cigarettes, liquor, betting and gaming, and motor vehicle assemblers, manufacturers, importers, and service providers in lieu of the various taxes and levies imposed under different Acts. Industry sources, speaking to The Morning Business, questioned the appropriateness of appointing a single unit established within the Treasury under the leadership of a named Deputy Secretary to the Treasury for the collection and accounting of the Special GST when considering the massive sum that will be collected, and pointed out that there are no check and balances within this new tax system.  They further questioned why the payment of this Special GST is to be done via an electronic transfer to the account of the named Deputy Secretary to the Treasury, instead of to the consolidation fund. The Special GST draft bill was approved to be presented to the Parliament by the Cabinet on 3 January and was tabled in Parliament on 20 January along with the Value Added Tax (Amendment) Bill and the Personal Data Protection Bill. Under the Special GST draft bill, the Finance Minister shall be empowered to determine applicable tax, the basis of computing the tax, and exceptions to the tax by an order published in the gazette.  The imposition of the Special GST was first proposed in 2021. Following its enactment, the responsibilities of the IRD shall be limited to merely collecting income tax.


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