Minister of Finance and Mass Media Mangala Samaraweera has stated that the Inland Revenue Bill will reduce the gap between direct tax and indirect tax by 2020, enabling the nation to move forward.
He made this observation moving the Inland Revenue Bill second reading motion in Parliament. He stated that by 2020 we will reduce the indirect tax from 82% to 60%, while increasing the direct tax from 18% to 40%. Issuing a universal tax number for all those who are above 18 years will enable easy and simplified tax payments. One does not have to pay tax just because a tax file is opened unless taxable income is there. In return, the taxpayers will enjoy many benefits and recognition. Those who oppose these proactive proposals are nothing but the forces against development.
He added that revenue has declined drastically during recent past. In 1990 state income stood at 19% of the GDP but has declined continuously to 10% by the end of 2014. Changing the direction, we were able to increase state revenue to 15% of GDP during the past two years. The ordinary people here suffer from higher indirect tax due to the fact that a direct tax is at low levels. We get 82% of our income from indirect tax where the direct tax income is at 18%. If we compare Sri Lanka with the region, Malaysia receives 70% as a direct tax, India maintains it at 50%, while Singapore has it pegged at 55%. Our neighbours Bangladesh gets 35% as direct tax and Pakistan 37%.