Know You and Other
Group Work
Discuss the current tax policies in Sri Lanka and how they affect the citizens.
In most countries including Sri Lanka, tax is one of the major revenues to the government. Taxes fund public infrastructure and services. Some of the very important public services launched by the government using tax money are free education and free medical services. And also, they are used for social development and welfare programs. The government has imposed several new taxes to increase revenue in light of the current economic crisis. One tax measure which is currently causing a heated debate is the income tax policy. For the first three quarters of the year of assessment 2022/23, beginning on the 1st of April 2022, income tax brackets were 6% and 12% for portions of Rs. 2 500 000. A bracket of 18% was taxed from the balance. With effect from the 1st of January 2023, the government introduced six tax brackets with a minimum of 6% and a maximum of 36%. As per the Inland Revenue Act changes, for the fourth quarter of the year of assessment 2022/23, brackets of 6%, 12%, 18%, 24%, and 30% apply for every Rs. 125 000. After Rs. 625 000, a rate of 36% applies to the balance. Similarly, for the year of assessment 2023/24, brackets of 6%, 12%, 18%, 24%, and 30% apply for every Rs. 500 000. A rate of 36% applies to the balance. An income tax is a type of tax imposed on individuals or entities in respect of the income or profits earned. In Sri Lanka, the current tax system is mostly comprised of indirect taxes, and a greater rate of tax evasion has resulted in a regressive tax structure. For families who gain a middle-level income, this tax policy is a bit difficult to bear. And also, the problem is though they charge a higher tax rate we don’t get enough facilities as citizens of the country. So, it is very unfair to charge tax at such rates in this country. The tax rates in Sri Lanka increased due to the economic crisis. High tax rates directly affect the business sectors. Most of the statistical analysis shows that mostly startup and growth-level businesses directly affect this tax problem. Since the dollar rate goes up, most companies cannot import their raw materials and other types of equipment. Cooperate-level international business owners are trying to shift their manufacturing plans to other countries like Singapore, Malaysia, and UAE. Regarding these facts, tax is very important but increasing the tax rates unnecessarily affects the Sri Lankan business parties. Governments of various countries have implemented many measures regarding taxation to meet their revenue needs, maintain economic stability and ensure equitable distribution of wealth. This includes setting tax rates, tax exemptions, and tax credits, implementing progressive tax systems, and enforcing strict tax compliance policies. Countries like Australia, and South Africa have adopted the digitization of tax systems, thereby increasing the efficiency and transparency of tax collection. In recent years, countries like New Zealand and Uruguay seem to be promoting sustainable development by heavily taxing carbon emissions. The most important thing is that in collecting taxes in all these countries, taxes are collected fairly according to the income of its people. So, when considering the above-given details, we can conclude that government has to charge taxes from us. But it is a must to have a limit for the tax in our country. We must be affordable.
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