DailyMirror:
The Presidential Commission on Taxation (Commission) has recommended far reaching tax reforms including the sharp reduction of the number of existing taxes which are about 60 to about half of it, simplifying the computation of taxes and offering a range of new tax holidays to local and foreign investors.
The 10 member Commission headed by Prof. W.D.Lakshman handed its voluminous final report to President Mahinda Rajapaksa on Tuesday afternoon at Temple Trees.
Prof. Lakshman in an exclusive interview with the Daily Mirror yesterday at his office at the BMICH said the main focus of the Commission was how to improve tax revenue without burdening the average citizen and also to motivate the private sector investment.The Commission has recommended -not to increase the rates of existing taxes in its attempt to improve the tax revenue -but to simplify the tax collection mechanism.
“We directed our attention to simplify the tax collection and recommended to reduce the number of existing taxes including the taxes imposed by Provincial Councils from 60 to about half of it. We have also recommended simplifying the tax collection and the method of computation instead of raising the tax rates,” Prof. Lakshman said.
The basic approach was to broaden the tax base and increase the coverage of the tax system. On one hand we have to achieve this through voluntary compliance. Therefore, the simplification of the entire tax regime and broadening the coverage of the tax system have been recommended to achieve desired results, Prof. Lakshman emphasized.
There will be a change of the incentive system in respect of private enterprises in addition to the introduction of a tax holiday system to investors to motivate them and attract investment.
The Commission has recommended a complete overhaul of the administration of the Inland Revenue Department, modernization of the tax administration and introducing of IT.
Prof. Lakshman said a series of legislative amendments were necessary to implement the recommendations of the Commission and a part of the recommendations have been incorporated in the budget 2011.“Our expectation is that these reforms (Recommendations) if implemented will modernize our income tax system and its structure to suit the level of development of the economy the government expects in the next five years. It will also facilitate foreign and local investment, longer growth momentum that will benefit each and every Sri Lankan.