22 April, 2019

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American IRS And The Sri Lankan Experience

By Ravi Perera

Ravi Perera

One would have thought that the recent news item about the resignation of Commissioner Steven Miller, the head of the Internal Revenue Service (IRS) of the United States would have received more attention than it actually did in the local media. The reasons for Miller’s exit are issues fundamentally affecting good governance and hence of compelling interest to a country such as Sri Lanka struggling from the time of independence to establish rules, standards and systems that are both transparent and objective as it were.

The current United States government led by President Barrack Obama is dominated by the   Democratic Party. They also command a majority in the Senate. Steven Miller was an appointee of the Obama administration. One of the functions of the IRS is to consider applications   for tax exemptions. The controversy that blew up arose in this department where some organizations considered to be leaning towards the Right were targeted by the IRS for special attention. The standard bearer of the ideology of the Right, the Republican Party, enraged by this uneven approach by a government agency raised an indignant outcry against the IRS.

A fundamental principle of good governance is that whichever political party is in power, the administration functions not only objectively but on a neutral, non-partisan basis. In a legitimate State, laws and rules should apply to all alike. If   the application of the laws depend on who you are, the legitimacy of that State is very much in doubt. In such a situation the State structure has become a tool in the hands of a few people, one political party or a group. In America, obviously they loathe to see politicized government agencies. As a Senator observed during the debate on Steven Miller “the American public deserve better…”

Taking that standard as the yard stick, it seems that we in Sri Lanka operate on the basis that the Sri Lankan public do not deserve a neutral public service!  Not only in the public sector, but in every other service, the Police, the Judiciary, Media and even the professional bodies political agenda/domination is overwhelming.

From the early years of the 20 Century when we were gradually introduced to the concept of electing our leaders, you can discern a clear departure from methods and standards of the countries from whom we got the idea. Things were looked at differently here. We had a different value system. Those elected to power become masters of all that they survey with the rest of the power structure adjusting their various agendas to suit that status quo.

One cannot imagine an officer  in our Inland Revenue Department losing his job because he investigated anybody considered to be opposed to the government !The same goes for all other government agencies such as the Police, Customs etc. They are there to attack enemies of the government while collaborating in all activities of its supporters!  As to the question of investigating anybody connected with the government, since the idea   will not even   enter the mind of a public servant we need not waste time on a subject which is so culturally alien. There is no point in even talking about Mervyn Silvas and Duminda Silvas! These two names have been highlighted only because of the entertainment value they provide. In reality this duo is just the tip of an iceberg composed of thousands of family members and friends of the politicians in power who are above the law. Even our political parties are built on family connections; most present day politicians owe their career to senior family members who had climbed the hierarchy earlier. Unlike in other cultures here a political dynasty is spoken of as a matter of pride.

Needless to say this situation breeds uncertainty, fear and frustration. The concept of fairness is a distant second when it comes to family and other partisan considerations. Even in a so called rebel group like the LTTE, the son of the supreme leader Prabakaran seems to have had an easy passage to leadership over the heads of thousands of dedicated cadre. As inevitably happens in Sri Lanka, there were several articles in the media   at the time extolling the talents and skills of the junior Prabakaran! Perhaps some of the striking features of our social and historical mosaic such as regular insurrections, disloyalty, sabotage, narrow outlook, short term vision, intolerance and even the high murder /suicide rate could be attributed to the experience of living under a culture which is palpably unfair. Having adopted systems which need to operate objectively, we seem to have subverted them into self-serving machinery for personal advancement.  Whatever the situation, from the Parliament to a simple meeting at a social club, few people would think we have fair processes. They are seen as occasions for interested parties to achieve agendas far removed from the principles and policies professed by them.

In the absences of an independent State structure, things become arbitrary, breeding a huge uncertainty. Everything depends on political leaders and their perceptions. Careers and promotions   are rarely made on merit. Invariably, they are based on the leaders’ agenda. Investors, businessmen, and even ordinary citizens must adjust their lives and plans   to suit this reality.

The twenty odd million people of Sri Lanka have been able to create an economy now calculated at something between 50-60 Billion US dollars. Last year it is said that the Americans spent about US $ 60 Billion on their pet food. Good eating by their cats and dogs aside, the American can also rest easy with the knowledge that they live in a country where government agencies like the IRS have to operate impartially and in an evenhanded way.

Don’t the people of Sri Lanka deserve that?

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Latest comments

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    We have no idea about an independent administration.An independent way of thinking is alien in this country .We just think in a partsan way that suits our bias, whatever that maybe. Our leaders are only concerned about political advantage. Take SWRD Bandaranayake, JR Jayawardena. They used the system for personal political glory. The only difference is that these two being widely read did all that with a certain style and maybe within certain limits.They did not crudely promote their families for instance.The Rajapakses are not like them. Anything is OK, even murder, bribery , intimidation.They are also masters at self promotion. Although none of them even went near enemy fire, they now claim the tigers were defeated by them. What about the thousands who fought? The millions who contributed in various ways , paying taxes etc? No the glory goes only to the family.It is the same with everything else. The family did it ! The bad things that happen ? Let us blame the international conspirators !

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    Our own inland revenue department is not ‘perfect’.
    Small taxpayers are harassed,but big ‘sharks’get away with paying only a fraction of tax owed.
    Tax Files of most politicians,many lawyers & businessmen are ‘dormant’.
    I know tax officers who were intimidated for issuing assessment notices,and had to give up trying to collect.
    “Declaration of Assets” is another big farce.
    If all MPs and those holding elective office delared assets,many could be charged with having unaccounted wealth,and will lose at next elections.

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    Have to rush off now and work on my tax return since I am not a Rajapaksa supporter……ruined my afternoon. Thanks any way for the reminder.

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    Only if our Inland Revenue Department was as able, feared and respected as it was until the late 1980s – when the State derived its due revenue from those who should pay, we would have been half way to that Utopia everybody dreams of – Singapura. But since then and progressively political leaders competed to drain the IRD and the officials therein were not far off in emptying the nation’s coffers.
    The rebates on garment exports racket is the stuff of mafia writers.

    If we can make the IRD work without interfering with the officials running it, there is still a chance we can place ourselves in the road to recovery.

    One reason India has failed in attracting FDI’s – compared to China’s over US$250 billion – is the politicised IRD there. Imagine the venal Karunanidhi extended family and JJ and friends in Tamilnadu alone hardly pay any taxes although their personal fortunes are estimated to be in the billions of dollars. And so Sonia G, Robert Vadera and the 1st and XIs in Indian politics.

    Senguttuvan

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