Top priority to appoint Tax Ombudsman

The need for a Tax Ombudsman is now more urgent than ever before due to the changes in the income tax regime and the implementation of the Revenue Administration Management Information System ( RAMIS) --- to prevent taxpayers running from pillar to post.

“I believe the time is opportune to address the concerns of the tax payers by appointing a Tax Ombudsman along the lines of the South African experience to achieve a balance that will enhance the degree of equity and fairness in tax administration,” said senior lawyer and PC - K. Kanag-Isvaran at the 22nd Annual Oration of Taxation on the “Tax Collector And the Rights of the Taxed” at the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) in Colombo this week.

Referring to the Tax Ombudsmen, Mr. Kanag-Isvaran said the concept of the Tax Ombudsman was introduced in the budget of November 2004, by the then incumbent Minister of Finance and the office was established on September 15, 2005 with the appointment of a retired High Court Judge who was the first and only holder of the office.

The administrative framework and operational guidelines pertaining to the Tax Ombudsman mandated the appointment to be a period of two years. No successor was appointed pursuant to the completion of this tenure and that office remains in abeyance. He said the tension between the tax collector and the taxed is as old in terms of recorded history and in every culture and in every part of history from the tax collectors of ancient Israel to the island revenue agents of today has received more than his share of contumely.

He said Chapter XVII of the Sri Lankan Constitution mandates the raising of finances from the citizen which shall only be by the authority of Parliament which is articulated in articles 148 and 152 of the Constitution. Under Article 148 of the Constitution, “Parliament shall have full control over public finance. No tax rate or any other levy shall be imposed by any local authority or any other public authority except by or under the authority of a law passed by Parliament of any existing law”.

Referring to Article 152, he said it speaks only of a “Bill or Motion” but everyone knows that day in and day out the Minister of Finance issues usually mid- night gazettes imposing or exempting or reducing taxes and levies. He said with the passage of the 13th Amendment to the Constitution in 1987 and with the establishment of the Provincial Councils in addition to the power of Parliament to impose taxes, the 13th Amendment also devolved power to impose taxes upon the Provincial Councils in respect of any matter set out in list 1 of the 9th schedule to the Constitution commonly referred to as the “Provincial Council List”.

This includes turnover taxes on wholesale and retailer, betting taxes, and taxes in prize competition in lotteries, license taxes, arrack, toddy rents, tapping license fee and liquor license fee, motor vehicles license fee, Stamp Duty on transfer of properties, and taxes on mineral rights and the like.

CA Sri Lanka President, Jagath Perera in his welcome address said that taxation is one of the key tools that is most likely to be taken over by technology. He said CA members should be mindful of the technological changes that are taking place in the world. “Any activity we do will be taken over by technology and taxation will not be an exception. We are going through the 4th Industrial Revolution and digitalisation is going to be the main feature.”