CA Sri Lanka seeks Zoom session with President to resolve pressing issues

• Move follows complaints from stakeholders on recent implementation of the tax policy as well as need for reduction in Govt. expenditure and improve transparency on tax spending

President Ranil Wickremesinghe

CA Sri Lanka President Sanjaya Bandara

The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) has written to President Ranil Wickremesinghe seeking an interactive session on Zoom to resolve pressing issues.

The move follows CA Sri Lanka receiving complaints from stakeholders, including members, regarding the recent implementation of the tax policy as well as the need for reduction in Government expenditure and improving transparency on tax spending.

CA Sri Lanka President Sanjaya Bandara has informed Wickremesinghe in writing that the increased personal income taxes have been particularly palpable, as evidenced by reduced take-home pay. This has become a pressing issue for many white-collar employees, particularly considering high inflation levels and higher interest rates. The combined effect of these factors has led to a substantial decrease in disposable income and will likely have a significant impact on various industries, including financial services.

Additionally, CA Sri Lanka has observed a migration of young professionals from the country. While international exposure and the opportunity to accumulate wealth can be beneficial for young professionals, the departure of even experienced professionals is causing a significant knowledge gap. This trend is likely to result in a critical shortage of human resources and a lack of necessary expertise to drive the sustainable growth and development of the nation.

“We believe that the Government’s recent tax policy change was not accompanied by an adequate communication strategy. Our stakeholders are also of the opinion that the taxes were increased without a corresponding plan to reduce Government expenditures,” Bandara has pointed out.

In terms of the need to reduce Government expenditure and improve transparency on tax spending, Bandara said that CA Sri Lanka would like to suggest that the Government could also announce a strategy to reduce expenditures along with the revised tax policy.

It was pointed out that although Government expenditure cannot be reduced overnight, it can be done within a reasonable period. For instance, public salary costs could be reduced by not replacing retiring employees, and loss-making entities such as the Ceylon Petroleum Corporation, Ceylon Electricity Board, and Sri Lankan Airlines could be restructured to reduce expenses over the next two years at least, while also taking measures to reduce Government bond-related interest expenditure which will result in a reduction to the tax burden.

“If a well-communicated, structured plan is implemented with a reasonable timeline, the taxpayers are likely to extend their support without much grievance. In the meantime, efforts must also be made to expand the tax base, which would reduce the tax burden on a small segment of taxpayers,” CA Sri Lanka President said.

Noting that the Government has a rational plan under President Wickremesinghe’s leadership, CA Sri Lanka said however this has not been effectively communicated to the stakeholders. Lack of communication and high tax burden has created room for misinterpretation and could result in civil unrest and possible tax evasion, leading to lower-than-expected tax revenue for the Government.

“Therefore, our main intention as the national body of accountants is to request your good office to give reasonable trust to the general public on the effective use of tax revenue, support the Government’s actions to reduce Government expenditure and the use of tax revenue in an effective way where returns can be gained in the long term. As such, it is vital to communicate the benefits and the future tax burden reduction,” Bandara said in making a case for a session with President Wickremesinghe via Zoom technology.