By R.P. Gunawardane –
It is disheartening to note that most professional organizations in Sri Lanka have resorted to trade union action including public protests, demonstrations and strikes against the new income tax policy implemented by the government recently as a condition for receiving IMF aid package. Most general public including university students and the patients are inconvenienced by this trade union action.
While trade unions have all the rights to protest in a democratic country, an elite well-respected group like educated professionals should act in a more responsible manner.
Sri Lanka is going through an enormous economic crisis during the last several years and it became very crucial since last year due to power crisis, fuel shortage and very high inflation unbearable to most citizens. Currently the government is negotiating for an IMF loan to get over this crisis as the only available option. There are certain conditions attached to this loan and those conditions have to be fulfilled to obtain the final approval. New income tax proposal is one of them and it is required in order to increase the government revenue up to a satisfactory level.
Our professionals including medical officers, university teachers, engineers, central bank officers all have gone through free education at primary and secondary levels with even free textbooks and then in the tertiary level at the university free of charge. In the university level some faculties like Faculty of Science including IT, Engineering, Medicine, Agriculture etc. require extensive funding for their equipment and consumables. All these funds are provided by the government.
Most received even Mahapola scholarships at the university, all funded by tax payer money. Some received even foreign training at government expenditure. These benefits are extremely rare in other countries and even in the richest countries in the world.
In other countries higher education is not free, you need to pay tuition fees in addition to your personal expenses. Most students get loans and repay when they start work after graduation. This is not the case in Sri Lanka because we have free education. This invaluable gift is not appreciated by the most recipients.
Unfortunately, in Sri Lanka everyone wants the government to provide their needs free of charge without fulfilling their obligations. The government needs funds to provide essential services and support the most vulnerable population. The funds to the government come from taxation, if taxes are not paid the government cannot provide the essential services to the people. Most importantly this means that your children will not receive the same benefits received by you. It includes free education up to university level and free health services among many other benefits.
Although this is a difficult period financially, it is time for our professionals to sacrifice for the benefit of future generations and pay back their dues. These professionals are a special group of high-income earners in the country with additional income from other services and private practice. Thus, they are in a better position to pay higher taxes imposed recently by the government. Once the difficult period is over the government will consider granting some concessions.
It is reported that a large number of young professionals have left the country for employment abroad and some others contemplate leaving the country for greener pastures. However, it should be stressed that you cannot get away from income tax where ever you go! All have to pay income tax in developed as well as developing countries at increasingly higher rate depending on your income. In USA even the student stipends are taxed. There is no way one can get away from this process. Tax is always deducted by the institution in all payments. In addition, it is compulsory for each person to file tax returns every year. If there is an overpayment that amount is returned immediately. Non-payment or under payment of taxes is considered one of the biggest crimes in USA.
No country can survive without a proper taxation system. Some Sri Lanka businessmen and professionals are used to underpayment or avoiding taxes while at the same time demanding higher salaries, benefits and services from the government. There is no logic in this expectation.
In order to get the support of the professionals in the country our government should also act responsibly by drastically minimizing the government expenditure in a transparent way. For this purpose, some suggestions are given below:
1. Sri Lanka is a small country and does not need a huge cabinet of ministers. Like in most other countries and considering the size of the country and its economy 12 ministers are more than sufficient. There should be no deputy or state ministers, secretaries of the ministries can perform these functions.
2. Minimize the personal staff of ministers, number of vehicles and allowances for fuel, curtail foreign travel, minimize staff in foreign missions and close down all unproductive embassies abroad.
3. Productivity should be increased by reducing the number of holidays. Sri Lanka has too many holidays (26 this year) in comparison with other countries (USA-10, Japan-15, India-16, Bangladesh-15)
4. All forms of corruption and inefficiencies of the government institutions should be investigated and appropriate action should be taken on priority basis.
Genuine attempts by the government to curtail expenditure and reduce corruption will go a long way to convince the professionals and other general public to cooperate with the government.
It has been reported that the IMF (International Monetary Fund) Board is meeting in the next week to consider approval of the much needed Extended Fund Facility (EFF) for Sri Lanka. Therefore, this is a crucial time for the economic recovery in Sri Lanka. Thus, in the current context, it is the responsibility of our learned professionals to act with restrain during this period and contribute effectively towards achieving economic recovery of the motherland for the benefit of future generations.
srikrish / March 13, 2023
I endorse every word in your article..
The funds to the government come from taxation- direct taxes and indirect taxes, if taxes are not paid, the government cannot provide the essential services to the people. That includes free education up to university level and free health services among many other benefits.
The government had recently introduced new taxation policy to earn substantial revenue on its own from the people as a way out of the present crisis. No one can expect even the wealthy nations to provide funds mostly loans indefinitely without any returns to them.
It is immoral to oppose the government taxation policy, especially the direct taxes. Indirect taxes are taxes paid by all the citizens irrespective of their economic status. Indirect taxes affect the poorer sections much more than the rich. The proportion of direct to indirect taxes in Sri Lanka is extremely low. The professionals should willingly pay the taxes imposed by the government since they had benefited most by free education and free health services among other benefits.
Any techniques adopted because of their bargaining power will not be in the interest of the country in the long run.
leelagemalli / March 14, 2023
People should make up their minds to contribute taxes now or later. If the systems are properly adjusted to standard practices compared to like-minded countries, people have no choice but to comply.
At the same time, the law and order should be well twisted and strictly enforced by them. No country could recover from their downfall by always turning a blind eye to disciplinary action against law breakers.
I am not a fan of Dr. Vijay, but he is at this stage, almost right in this regard, please watch the video below.
. If the Sri Lankan population opens up to regional markets with export and import policy reforms, nothing can go wrong. This was the aim of the good governance government, however, now again after the looting of the Rajapaksas, the current views are in line with the good governance government. Now is the time, not to walk in circles, they must finally implement them. However, proper relief should be given to most of the victims but they should be controlled according to the database.
I think right now, there are some signs that the economy may gradually work in the nation’s favor. I have no idea that tourism is doing well because the promotion is at its best. Kudos to Harin Fernando.
I hated Iraj, but I think what he has displayed here is the update about tourist arrivals.
RBH59 / March 13, 2023
Role Of Professionals In Achieving Our Economic Recovery
Role Of Professionals who was unable to forecast the bankruptcy can they Achieve Our Economic Recovery without taxing, We embrace illusions only because we are presented with the illusion that they are embraced by. It is a comedian who believes politicians will end the problems and poverty they have created in the first place.
Raj-UK / March 13, 2023
A professional, first & foremost, takes pride in his or her profession, is unbiased, & strive to do the best every time. Usually, a professional is attached to a professional body, which spells out the ethical policy the members are expected to comply with. Unfortunately, this is not the case in SL. From primary school to graduation in SL, the focus is on passing an exam, usually, ‘force fed’, & the concept of a more rounded education outside the curriculum is missing. As the author has correctly pointed out, we only have to look at the GMOA, which is a trade union & not a professional body, & some of those indifferent, even corrupt graduates in the govt. service (such lethargy & inefficiency would never be tolerated in the private sector) to understand that it is a result of our free higher education system, which politicians have exploited, that is taken for granted & not appreciated. I know several SL doctors who have come over for employment, talking about ‘patriotism & nationalism’ but failing in their own debt to society for the free education they received. I have nothing against seeking greener pastures & I am an economic migrant myself but I have paid for my education, including my UK University education. Everybody should be entitled to an education but a free higher education is unsustainable.
Raj-UK / March 13, 2023
Furthermore, education should be ‘fit for purpose’, according to the needs of the country & quality of education should not be compromised by dishing it free.
In UK, a senior nurse or a skilled worker earns more than a junior doctor, the earning potential is very much the same for a graduate or a non graduate & there are no special privileges for certain employments as in SL. Everybody pays tax on their earnings, perks are also taxed as ‘benefit in kind’, & contribution to National Insurance, which funds the govt. pension & health care everybody is entitled to, are all deducted at source. The responsibility of disclosing other income is with the receiver, as required & enforced by law.
Recently, State sector workers, including nurses & junior doctors, have been on strike intermittently but the senior doctors & other staff, including some nurses, are not in support & business is as usual, albeit, less productively, due to staff shortage on those days. A token strike crippling the daily operations is never possible. The Unions are expected to ensure at least a skeleton staff by law. The govt., although, may compromise in some ways, usually does not give in to strikers’ demands but strikers do have public sympathy usually.
ramona therese fernando / March 14, 2023
Prof R.P. Gunawardane,
All what you say about taxing the professionals is true. However, this kind of usual first-world-type taxation can only be done when a country is functioning normally.
When the country is going through severe depression, taking money from hardworking professionals to fund futuristic projects, like keeping the money-stock of bondholders in balance, whilst the struggling professionals pay for social-services is immoral.
What you say of the removal of political excesses, must come first. Next must come the taxation of big US-billion Lankan businesses. These entities are kept untaxed for futuristic goals of the autocratic government. Tax them, and spread the wealth to the Masses, so Lanka can truly begin developing from the core of her potential.
ramona therese fernando / March 14, 2023
The reason the French Revolution came about was due to the Commoners paying most of the tax whilst the Nobles and Clergy were exempt from it (although clergy gave in form of tithe collected from mostly the common people). Same scenario during the Russian Revolution. Amazing that the Lankan government in these enlightened times, sees it fit to belong to those eras.
Nathan / March 14, 2023
Wherever they go they readily pay income tax because they know that those countries use the contributions only towards benefiting the people.