Taxation has become a hot topic today; it is a key measure, which can help Sri Lanka emerge from the economic crisis. Although tax collection is a fundamental need for a developing nation, public perceptions aren’t positive and need to change.
According to the Founder and Chief Executive Officer of 99x Mano Sekaram, this unfavourable opinion of taxation stems from the country’s culture.
“When you look at Sri Lankans culturally, we don’t have the notion of paying taxes because this has been a subsidised economy where everything is provided free or by way of subsidies,” he said, on a recent edition of LMDtv.
He also elaborated on the magnitude of Sri Lanka’s tax evasion: “Statistics show that of the working population of nine million, only 300,000-400,000 people maintain tax files.”
“I think this stems from us not being honest about declaring our income,” he said, adding that changing public perceptions begins with creating a civic minded society that does the right thing.
Sekaram empathised with low and middle income wage earners who are affected – more so than others – by the new tax rates. But he emphasised that tax collection is necessary for the country to come out of the economic crisis.
In addition, he shared his views on people questioning why they should pay tax and how it benefits them: “There are a lot of questions – and rightly so. However, just because the government is wasting money or there’s rampant corruption and no proper utilisation of funds, we cannot avoid paying taxes.”
“We must do the right thing; it is for us to change the system and make politicians accountable – that’s our duty and the way we should go about this,” Sekaram asserted.
He cited examples of best practices from successful economies like Singapore, India and Dubai, which have built a good base for revenue collection and accountability.
“They brought a larger population into the taxpaying bracket. I think it is very important to widen the net – otherwise, there’s a feeling that the same people pay taxes over and over again while we have a wide section of the population [who are] not within the tax bracket,” he explained.
Sekaram pointed to several measures that Sri Lanka should look at including expanding the approach to tax assessment: “Number one is to deploy more tax assessors in the field to do assessments and hand over [tax] files – we can even outsource this to private individuals or companies, and have better ways of assessing and collecting taxes.”
In his view, the key to streamlining taxation is through digitalisation. He explained how every citizen should have a digital identity: “The technology that will link all systems is available; and then it won’t be rocket science to know who is spending what.”
Adding to this, he stated that we should move “towards a cashless society – all banking transactions should be linked with systems from the motor vehicle registry to the land registry,” recording even “day-to-day expenses as well as big expenses like airline tickets.”
“We need to bring these things together – this is not something that’s impossible to start,” he maintained.
Sekaram also commended LMD for its Refresh Sri Lanka campaign, explaining that creating a civic minded society is the right place to begin: “Taxation is one part but there are so many other things about being civic minded. It’s about saying ‘no’ to corruption, always trying to do the right thing and ensuring that we build a fantastic ethos for the country.”
“Ethics is about doing the right thing when nobody else is looking,” he explained, adding that starting to build a civic minded society will result in a mass movement where “even politicians and the government will fall in line if the majority of the people demonstrate that they are civic minded citizens.”
“Do the right thing – it’s the most important thing for your country… and the future of the country,” Sekaram concluded.