By R.P. Gunawardane –

Prof 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.