FSP slams Special GST over propensity for corruption

  • Notes lack of transparency/accountability/Parliament oversight 

The Frontline Socialist Party (FSP) yesterday (31 January) raised concerns about the newly gazetted Special Goods and Services Tax (SGST), warning that it could lead to corruption as they claim that it will bring about a lack of transparency and accountability.

“The SGST was gazetted on 7 January. There are clear signs that the money will be misused through this Act. The Act aims to regulate the taxes of five main goods and services, which amounts to 23% of the Government’s spending and one-fourth of the Government’s income. These taxes, which are currently being collected by the Customs, the Inland Revenue Department (IRD), and the Excise Department, will, through this Act, be collected by a special division, under the charge of a single Treasury official. This official can be controlled like a puppet by the Finance Minister,” claimed the FSP Education Secretary Pubudu Jayagoda yesterday.

Jayagoda said that according to one section of the proposed Act, the taxes will be deposited to a private account, under the name of the designated official.

“There is no Parliamentary oversight here. Taxes are usually collected by the Consolidated Fund, which is accountable to both the Parliament and the Auditor General’s Department. How are such harmful laws formed? How are they approved by the Cabinet of Ministers?” questioned Jayagoda.

He stressed that labour unions and activists must protest against the approval of the SGST in the Parliament.

The SGST will impose a single tax on telecommunication, cigarettes, liquor, betting and gaming, and motor vehicle assemblers, manufacturers, importers, and service providers in lieu of the various taxes and levies imposed under different Acts. The gazette regarding the SGST was issued on 7 January.

The Bill empowers the Finance Minister to determine the rate of the tax, the basis of computing the tax, and exceptions to the tax by an order published in the gazette. Furthermore, a unit established within the Treasury, under the leadership of a named Deputy Secretary to the Treasury, will be responsible for the collection and accounting of the SGST.

Two petitions were filed in the Supreme Court last week against the SGST, one by the Inland Revenue Commissioners Association and the other by the Samagi Jana Balawegeya (SJB). A number of protests were held this month against the Bill, mainly led by the Excise Trade Unions Collective.

Finance Minister Basil Rajapaksa presented the Bill in Parliament on 20 January, and it is due to be taken up for debate on 10 February.