Special GST unit exposes hidden revenue collection authority

The government’s move to establish revenue collection authority has come to light with the recent decision to set up a separate unit to handle special Goods and Services Tax (GST) amidst protests of Inland Revenue Department executives and other staff officials. 

The takeover by the Treasury of some of the functions of the Inland Revenue Department (IRD) along with the introduction of an online managed single Special Goods and Service Tax (GST) in place of the various goods and service taxes and levies, has sparked protests from IRD staff.

The necessary amendments to the finance act will be made by enacting a Special GST bill in parliament, he said, adding that the draft bill has been submitted to the Attorney General’s Department to finalise it.

He added that several serious incidents of corruption and fraud reported at IRD in VAT and GST collection in the past and such corrupt practices could be eliminated by establishing a separate unit at the treasury.

Joint Secretary of the Inland Revenue Service Executive officers’ Association H. A. L. Udayasiri said  that this move is against the established system and procedure of revenue collection in Sri Lanka.

A senior Treasury official said that this special GST has been introduced in the 2021 budget and the cabinet of ministers has given its approval to set up the separate division at the Treasury to handle this, taking over this function from the IRD.

The necessary amendments to the Finance Act will be made by enacting the Special GST bill in Parliament, he said.

He added that several serious incidents of corruption and fraud reported at IRD in VAT and GST collection in the past and such corrupt practices could be eliminated by establishing a separate unit at the Treasury.

However, union leader Mr. Udayasiri said that the IRD is responsible for the collection of 54 percent of total revenue collection in Sri Lanka and taking over its responsibilities and functions one by one will create a dangerous precedent. He noted that there are ways to tackle corruption but this type of remedies will give dictatorial powers to special units with vested interests.

Under these circumstances, the IRD employees associations and unions will have no option other than resorting to trade union action to safeguard their rights and protect the department structure maintained for many decades, he said

The Special GST will be imposed under multiple laws and institutions on alcohol, cigarettes, telecommunication, betting and gaming and vehicles, which accounts for 50 per cent of the income from taxes and levies.

It is expected through this reform to direct institutions under special legislation such as the Excise Ordinance to have a more focused regulatory engagement in facilitating the government to secure its revenues otherwise lost through sale of illicit alcohol and cigarettes, Finance Ministry sources said.

This single tax will further simplify the country’s taxation system replacing several taxes under the new GST bill which is now being drafted, he disclosed.

The new tax, one of the key proposals in the 2021 budget, will be determined before its implementation soon, he said, adding that the estimated revenue from this tax would be over LKR 670 billion.