In the wake of the recent revelations made at the parliamentary Committee on Public Enterprises (COPE) regarding the payment of Pay As You Earn (PAYE) tax of Ceylon Electricity Board (CEB) employees out of taxpayers’ pockets, the Power and Energy Ministry said it would act according to the directives of the COPE.It was revealed to the COPE that the CEB had paid Rs. 4.8 billion (PAYE/APIT) in taxes from its funds without deducting from the salaries of the employees till 2020. Officials who were present had pointed out that the payment of this tax had been stopped by now.Commenting on this, the COPE Chairman Charitha Herath pointed out that this was a serious concern and added that it showed that, at the end of the day, this money had been paid from the monies of the people of the country.When contacted by The Sunday Morning, Power and Energy Ministry Secretary M.P.D.U.K. Mapa Pathirana stressed that the matter had now been taken up at the COPE and therefore the Ministry could only act on the directives of the COPE.However, as revealed by the National Audit Office (NAO), the Cabinet of Ministers has taken decisions on 13 December 2007 at the time of salary revisions and on 20 May 2015 at the time of consideration of the Collective Agreement to shift the PAYE tax liability to employees.However, the CEB had paid the PAYE tax of Rs. 4,919,156,644 from its own funds without deducting it from the salaries of the respective employees during the period between 2010 and 2019, contradicting the above decisions taken by the Cabinet of Ministers and Circular No. 3/2016 issued by the Department of Public Enterprises. The amount paid during the year under review was Rs. 709,110,273.Furthermore, in its report, the NAO has highlighted that the value of non-cash benefits specified by the Commissioner General of Inland Revenue in the Gazette Notification No. 1706/18 dated 20 May 2001 should be considered when calculating the PAYE tax of each employee. However, the CEB had not taken into account the non-cash benefits such as provision of quarters, apartments, motor vehicles for private use, etc. for this purpose.In its response, the CEB’s management has stated that the PAYE tax liability of CEB employees had been borne by the CEB since its employees were made liable for PAYE tax and that this had been informed to the Ministry of Power and Energy and Salaries and Cadre Commission on several occasions, while discussions had also been held with trade unions.However, no consensus had been reached regarding reverting the payment to employees. The Collective Agreement signed on 4 January 2018 has been published by the Extraordinary Gazette No. 2068/5 dated 23 April 2018. There now appears to be a violation of the Collective Agreement by changing the agreed remuneration and will create further legal repercussions.Furthermore, the management has stressed that the instructions were issued through 2018/GM/39/FM, Accounts Circular No. 526 to take the non-cash benefits such as quarters, apartments, motor vehicles for private use, etc. for the PAYE calculation. Since the instructions had been issued with the implementation of the new Inland Revenue Act in 2018, it has been noted that it will take a reasonable period to comply with this by all the divisions of the CEB.The NAO in its recommendations had stated that action should be taken to recover the PAYE tax from employees and to consider all non-cash benefits in the calculation of PAYE tax.When contacted, a senior member of the CEB management who wished to remain anonymous told The Sunday Morning that the issue was not something related to the employees as they had not requested the institution to pay the PAYE tax on their behalf but instead it had been included in the remuneration package.“This is not just limited to the CEB; there are 20 such State institutions including the Central Bank,” he stressed, adding that since 2020, the CEB had stopped paying the tax on behalf of the employees and started to reduce the amount from the salaries, considering the salary hikes given to them. Meanwhile, when contacted, CEB Chairman Nalinda Ilangakoon said the PAYE tax had been stopped and the CEB had to give a comprehensive answer to the COPE. “We don’t pay it now,” he added.– By Maheesha Mudugamuwa
