2 July, 2022


Double Taxation Whammy From Good Governance Government

By Chirantha Amerasinghe

Chirantha Amerasinghe

Chirantha Amerasinghe

In a world that is signing economic agreements against double taxation and the very thought of it is a human rights violation; here we are again shamefully saying that the citizens of Sri Lanka are subjected to a double taxation. We have to accept that any government requires a healthy tax policy to maintain a stable economy, so one cannot say people should not be taxed. However any policy should be healthy and should not harass the people, if it does it would be the demise of any government as history recalls. Lord Buddha said that “Authorities must take taxes in the matter of which a Bee takes pollen from a flower without harming it”. Coincidentally, my great great grandfathers brother, Veerapuranappu who is a national hero, stood up against such taxes and led rebellion against the English government as Viscount Torrington the then Governor of Sri Lanka imposed excessive taxes and burdened the people.

From the 2nd of May 2016 the taxes on telecommunication services were double taxed by VAT and NBT. As a result the tax on telephone charges which was at 27.55% rose to 49.73% which is an increase of 80%. Also the tax on internet charges which was at 12.24% rose to 31.77% thus an increase of 159%. Currently the effective rate of VAT on the above taxes is 19.53% which is 4.53% higher than what is said in parliament due to a effective rate policy. This cannot be a policy of “Good Governance” either.mobile protest  8

The background story lies behind the reintroduction of the VAT and NBT to the Telecommunications Sector through the budget which took effect from 2nd of May. The current government accused the former government of removing VAT and NBT from the Telecommunications Sector to make a political gain in a Parliament full of old and out dated people who cannot even listen or remember these actions and are not even bothered to do so. In reality the former government did not remove VAT and NBT from Telecommunication Services but rather combined the two into the Telecommunications Levy which today stands at 26.04%.

On 22nd November of 2010 a budget was passed in parliament by the former President now MP Mahinda Rajapaksa who was quoted saying “The Telecommunications industry is the backbone of modern economies. The tax applicable to this sector is complex. Therefore, I propose to combine all such taxes and impose a Telecommunications Levy of 20 percent.”. Thereafter the Central Bank Annual Report of 2011 quoted “A Composite Telecommunications Levy of 20 per cent was introduced replacing the VAT, NBT and Cellular Mobile Subscriber’s Levy on telecommunication services.” (Page 191). Therefore it is clear that the current government’s statement with regard to the removal of VAT, NBT is false as it is already included in the Telecommunications Levy, so the reintroduction of the same is clearly illegal as it is a double taxation and is also in breach of the new governments Good Governance promise to the people.

A family I know has three boys (all of them are teenagers). After the tax hike each teenager needs Rs. 100/- for their phone every two days. Now you might think that the boys spend too much of time on the phone, No! Rs. 100 only allows a person to talk for 25 minutes on the phone with the new tax whereas before this they could talk for 36 minutes. Communication in a troubled country is the only solace people have to say their troubles and pains and to share their grievances. This taxation has negatively affected the social connections in the society as well as the mental happiness of the Sri Lankan citizens especially the Youth who due to the challenging and corrupt society are trapped to their homes for their own safety and are forced to express their emotions over telephone calls, now they cannot even do that “mal kadanna” and sometimes people are forced to balance their relationships over the telephone because of heavy work. We no longer live in a country that a small girl can walk to school and back without the protection of their parents. Parents cannot send out their teenage boys without the risk of them getting involved in drugs, smoking and alcohol.

In foreign countries local calls or calls within networks are mostly offered free of charge or are free for a substantial amount of talk time for a monthly rental. In my conversations with the Telecommunications Regulatory Commission of Sri Lanka (TRCSL) it is confirmed that costs of call charges within networks are very very low. However the sale of the Dialog Blaster package which offered 1000 minutes of D2D talk time was stopped by the TRCSL in 2009 mainly because free minutes for Rs. 350 meant less tax income for the government, the TRCSL behaves like the Business Regulatory Commission setting up minimum rates for calls and destroying business competition that consumers would benefit from. Today this is the same reason prices of Petrol and Diesel have not come down. It is the same reason law enforcement officers are required to bring up X number of fines. How does a government predict or demand X numbers of fines? These are all policies of the old government! One must ask are these policies of Good Governance?

The Sri Lankan Media has been awfully silent with regard to this matter of Double Taxation on Telephone charges mainly because of the weather situation and the natural disaster. However weather is temporary and taxes are not, as such the media should bring up the required uproar against this injustice. Many international media’s which were taking the side of the people during the former government so much that they had to be blocked are now taking the side of the government even when they are seeing this injustice and breach of “Good Governance”. In one such interview in the BBC Sinhala section, the Minister in charge of Telecommunications tries to justify the taxes because telephone charges in Sri Lanka are the 13th lowest in the world. Comparatively in that list, considering the size of the country, and costs compared to the others in that list it is clear that Sri Lankan phone call prices are overpriced. A MP in the now government was quoted saying “Phone calls can be given for 40 cents a minute” when he was in the opposition. Nowadays he goes on the local media and tries to justify the taxes.

Effectively in the historical perspective the now President and Finance Minister are related to history in many ways. Just like the English taking over the country from the Dutch, the now President has taken over the country defeating the former President. The President now respectfully depicts the Queen of England. The Finance Minister is now effectively the Viscount Torrington the governor who has burdened the people with excessive taxes. And now today the people have risen against this move. As a member of the National Movement for Consumer Right Protection, I earnestly request the public to take part in the protest that will be held tomorrow Sunday 29th of May 2016 at 10.00AM in front of the Fort Railway station where a petition will be signed to take this matter to the courts. This is a struggle for our future and democracy with a government that has delivered burdens more than the solace promised to people and has forced people go to courts over government policies, those who do are branded as people who are trying to bring forth the thieves of the former government. All these matters even though hilarious now are clear indications of a stubborn and dictatorship rule in the future.

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  • 5

    Completely agree with contents.

    However govts need revenue to feed and sustain a society who is expecting everything free. We are a subsidy based society where general public expects everything free and not willing to pay for govt services.

    Look at Agriculture as an example and burden on society. No incentive to innovate or improve.

    40% employed and contributes 10% of GDP.
    Free water and irrigation
    Free or heavily subsidized fertilizer
    Free crop insurance
    Every 5 years farmer loans are written off by state banks
    Guaranteed purchase price well above global prices
    Free technical advice

    Look at graduates and doctors who after receiving free education is demanding jobs in the govt sector as well.

    Hence govt has to look for easy industry targets for taxes such as:

    Banking and Finance

    Name of the game is Indirect taxes and hence we collect almost 85% now from indirect taxes.

    Our tax revenue is only 12% of GDO and has to go up to around 20%.

    So be ready to cough out more taxes.!!!

    • 1

      Chirantha Amerasinghe

      RE: Double Taxation Whammy From Good Governance Government

      “However govts need revenue to feed and sustain a society who is expecting everything free. We are a subsidy based society where general public expects everything free and not willing to pay for govt services.”

      Somebody asked the bank robbers in the Wild West (in the USA), as to why they rob banks. They said “That is where the money is”.

      So, the current Govt. is doing the same. Can’t rob the farmers and low-paid workers, because they have no money.

      Can’t rob the politicians or recover the stolen billions, because they have influence. Can’t add taxes to food, then people will starve and the politicians will be eaten alive!

      So, go after those with mobile phones and the internet!

      How are the other countries doing compared to Sri Lanka?

      List of countries by tax rates


      Comparison of tax rates around the world is difficult and somewhat subjective. Tax laws in most countries are extremely complex, and tax burden falls differently on different groups in each country and sub-national unit.

    • 1

      Ranil is off to have fun with Rotary Boys while Sri Lanka is in the midst of Economic and environmental Disaster. Totally irresponsible leaders. Sira meanwhile is begging from the G-7 the high table of Global FINANCIAL CORRUPTION for a few crumbs to mask the Ayahapalanaya Debacle in the Miracle Of Modayas!

      CT editors we need you to be on the ball with regard to political corruption and the Panama Papers.
      Please check out and use Economist Jeffrey Sacks article on Global corruption and talk shops like G-7, Camaron’s corruption summit and Davos!


      Sacks writes : To end corruption, start with the US and UK. They allow it in broad daylight Jeffrey Sachs Their support for shell companies, tax havens and impunity facilitate wrongdoing. Delegates at the Anti-Corruption summit should not forget that Check out Jeffrey Sacks, Economist and Head of Earth Institute at Columbia University in New York The fight against corruption entails no small amount of absurdity, since so much of the corruption these days occurs in broad daylight. The corruption is so blatant, so indefensible, that attempts at justification are necessarily surreal. Recently, 300 economists, including me, made the point thanks to Oxfam’s mobilization. Prime Minister David Cameron’s job at Thursday’s Anti-Corruption Summit is not to whisper about the corruption of Nigeria or Afghanistan but to end the deep and historic role of the United Kingdom in this sordid mess. Ditto for the US and other major parties to the abuse. One of the pervasive elements of corruption is the use of shell companies, which are legal entities designed purely to protect real owners from disclosure, liability and accountability. When the Panama Papers were leaked, the law firm at the center of the disclosure, Mossack Fonseca, had this astounding justification: Finally, the instances you cite in your reporting represent a fraction – less than 1% – of the approximately 300,000 companies that Mossack Fonseca has incorporated in its over 40 years in operation. This fact shows that the vast majority of our clients use companies we incorporate for legitimate uses and that our due diligence and compliance procedures are overwhelmingly successful in thwarting those who have other intentions. The very idea that the law firm has done “due diligence” on 300,000 companies, even over 40 years, is beyond ludicrous. Even over 40 years and 250 working days per year, incorporating 300,000 companies would entail an average of 30 companies per day. Of course there is no due diligence (as the corrupt cases plainly demonstrate). There is blatant abuse of incorporation. The UK is at the center of this network of impunity, a legacy of the British Empire and a measure of the continuing role of the City of London in transferring tax-free funds around the world. The British Virgin Islands, a UK oversees territory, has a population of 28,000 people and more than 1m registered companies, roughly 35 companies per resident population. It is by far the most popular tax haven of the Panama Papers companies. Recent estimates hold that the British Virgin Islands host about 479,000 active companies. Current Time 0:00 / Duration Time 2:33 Loaded: 0% Progress: 0% Mute Facebook Twitter Pinterest What are the top 10 most secretive tax havens? Cameron: ‘fantastically corrupt’ countries at corruption summit – live Rolling coverage of all the day’s political developments as they happen, including Iain Duncan Smith’s EU referendum speech Read more The tentacles of corruption reach deep into the UK (and US) financial systems. Banks in the City of London and Wall Street have paid tens of billions of dollars of fines for insider trading, financial fraud, price rigging and other financial crimes in recent years. Yet almost no leading bankers have taken a hit for their organization’s malfeasance. It’s hard to escape the conclusion that the major financial firms are part of a global network of organized financial crime. Yet the tax havens and the bankers certainly have their defenders. That’s the real point. The impunity is so strong that even the most flagrant abuses such as 479,000 shell companies in the British Virgin Islands, lead to little if any action. Consider the recent statements by Conservative MP Dominic Grieve, who claims that the British Virgin Islands are “entitled” to run their financial haven as they see fit. Of course this is all the more shocking because Grieve is former attorney general of England and Wales and a member of the Privy Council. Advertisement The UK and the US are at center of the system of global abuse. Britain created the modern world of global finance in the 19th and early 20th centuries, and Wall Street became co-leader with the City of London after the second world war. In both countries, hundreds of thousands of lawyers, bankers, hedge fund operators, politicians, accountants and regulators have consciously built a system of global tax havens of the rich, by the rich, and for the rich that now hosts more than $20tn (yes, trillion) of funds hiding from taxes, law authorities, environmental regulation and accountability. Good that the UK is hosting the Anti-Corruption Summit. But let’s be clear. As serious and tragic as is the corruption in Nigeria, Afghanistan and elsewhere, it has long been facilitated by the UK itself (including through Royal Dutch Shell, not just tax havens). We should distinguish the big and small operators. As the famous old English ditty puts its: The law demands that we atone When we take things we do not own But leaves the lords and ladies fine Who take things that are yours and mine.

    • 3

      The solution to the tax crisis is to go after the Tax dodgers and Tax havens and the Sri Lankas in the Panama Papers and other corruption lists, and not load more taxes onto the poor and struggling Middle class.

  • 5


    You indeed have Veerapuranappu’s genes!

    MR was right when he said,”The Telecommunications industry is the backbone of modern economies. The tax applicable to this sector is complex. Therefore, I propose to combine all such taxes and impose a Telecommunications Levy of 20 percent.”.

    What has happened with the recent VAT + NBT levy on communications is highway robbery.

    I cannot join your protest because of my age, but I wish you lots of luck in your endeavor.

    I hope the Supreme Court will respond judiciously and with concern for millions of mobile phone and Internet users.

    Dr.Rajasingham Narendran

  • 3

    There is some thing called – there is no free lunch. How the government could provide so many welfare facilities to the people without any revenue? Our revenue collection is hardly enough to pay, at least the interests of the existing loans. So those who enjoy it, should pay for it. All have to tighten their belts until the country’s financial situation improves. Previous lot looted every thing and made a mess out of every thing.

    • 2

      That cannot under no grounds be an excuse for double taxation

  • 1

    The Govt. needs to tax the masses through direct & indirect taxes to pay for the expensive cars & other perks enjoyed by the politicians, high salaries for their cronies & relatives (like MS’s own brother’s exorbitant salary for his expertise in telecoms), the economic blunders made by these highly paid bureaucrats, not to mention maintaining white elephants like the Mattala airport & other stupid projects initiated by the previous regime, as well as, loss making state enterprises like Sri Lankan & Mihin air.

    The inland revenue dare not go after the rich & powerful, so it’s the PAYE tax payer & the poor masses who have to pay, and as for the average tax payer, it’s indeed a double whammy. Simple economics of an unsuitable Finance Minister.

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