The present draft tax proposals states that the introduction of With Holding Tax (WHT) would be only an advanced deduction, and the Payees will be subjected to file Tax returns each year and make the balance payments, over and above the WHT percentage, if they are liable to do so. In effect, all those whose income will be more than the tax threshold, will be forced to open Tax files and submit tax returns hereafter.
What a wasteful expenditure! Were the officials aware of or did it occur to them, the substantial administrative costs to be borne by them for this complicated exercise? Also, the unnecessary hassle for the tax liable public in filing returns, which easily can be avoided. It would have been simpler, practical and most appropriate for the government to use the existing banking system and its facilities to make the tax deductions, which could be made foolproof by fixing higher WHT rates on interest income, and making it a final tax?
The government would earn much higher revenue without incurring even 10 % of the anticipated administrative costs, and the hassle of monitoring. To avoid deduction of a higher percentage on low income earners a slab system could be introduced; to be applied on the basis of a declaration by the depositor, confirming his total income does not exceed an agreed amount.
By this method the hassle of opening tax files by all and sundry, filing returns, monitoring payments, and substantial admin costs could be avoided. Moreover, through the banking system these collections could be done much more effectively, and with the introduction of the unique identities as proposed will leave no room for defects, errors or irregular declarations.Over to the experts to consider these thoughts in a more professional manner!
RTD – Colombo
