10/04/2023, 12.09
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Colombo: Corruption and inefficiency leaves a billion-dollar 'hole' in the country's coffers

by Arundathie Abeysinghe

The revenue agency and the customs and excise administration are in the crosshairs. It will be difficult for the government to meet the short-term targets set by the IMF. According to experts, the executive 'has little or no room to increase tax rates'. The incidence of corruption has been growing since 2005, weighing more and more heavily on the budget.

Colombo (AsiaNews) - Inefficiency and corruption of bureaucrats and government apparatus, combined with the lack of an appropriate control and development system, have resulted in a 500 billion rupee (1.5 billion dollar) "hole" in three state institutions: revenue, customs and excise administration.

This was reported by the parliamentary commission for the supervision of economic and planning programmes, which identified the losses and called for the formation of a special committee of 50 officials called to monitor the work of the institutions.

Approximately 86% of the funds collected by the Department of Revenue come from just 464 entities, suggesting an inability to expand the collection base, despite a staff of approximately 2,500.

Due to revenue collection challenges, the government will struggle to meet short-term targets set by the International Monetary Fund (IMF) unless it increases efforts to raise revenues from its three main sources of revenue. Economist Navin Hewawitharana explains to AsiaNews that "the government has little or no room to increase tax rates" in various sectors to achieve "the objectives".

“Since 2005 the incidence of corruption - continues the expert - has increased significantly” as emerges from the data released by the independent research institute V-Dem (Varieties of Democracy).

They show that both the frequency with which politicians use office for private or party gains has grown, as has the practice of government officials using office to grant favors in exchange for bribes or undue benefits.

According to scholars Neville Weerakoon and Anushika Gamage "the 2020 Corruption Perception Index conducted by Transparency International placed Sri Lanka in 94th place out of 179 nations, while India is in 86th and Singapore in third".

To strengthen the economy, they continue, "corruption must also decrease, in order to meet high international standards, ensuring that laws are applied and that procedures are fluid and streamlined" so that "there is no possibility of requesting bribes along path". Sri Lanka, they conclude, "has the possibility of improving these aspects".

The government's high personal tax rates have had a devastating impact on professionals, which is why many of them are seeking work opportunities abroad. Responding to the requests of professionals, the executive promised some tax relief starting from January next year.

However, there is more than a doubt as to whether immediate action can be taken, even considering "last week's setback following the review by the IMF" concluded Neville and Anushika.

In the meantime, the flight of Sri Lankans abroad continues at a rapid pace and is driven with particular vigor by some sectors. On all those in engineering, academia, healthcare and aviation, who are facing the brunt of the brain drain.

The economist Senarath Attanayaka sees "confusion" within the government, because he refers to "the foreign remittances" that will come in thanks to the work of emigrant professionals.

However, a mass exodus would mean losing the most important part of intelligence, production, innovation and undermining reconstruction efforts at the root. “Sri Lanka - concludes the expert - cannot afford to lose the services of such a large number of intellectuals and professionals, at a time when it is trying to emerge from the worst economic crisis since independence”.

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