About tax

 Bond issuance and taxation are two of the most popular ways for governments to make money.

Why does the government require money?

The value of what we have in terms of goods or services and the money must be kept in balance among the peoples. Additionally, there is the country's balance of imports and exports. or simply the sum of the government's income and outlays. Otherwise, it will lead to a severe economic crisis in the nation.

Who pays taxes?

In order to fund public services and programs, governments impose taxes on people's income, purchases of goods, and services. Usually, taxes are determined by a person's income, the cost of a good or service, or other elements like property ownership. The tax laws and regulations, which vary by country and are subject to charge, determine how much tax an individual or a business must pay.

Why ……?

Governments must levy taxes to pay for social welfare, national defense, infrastructure (roads, bridges, water systems, etc.), and other public services. The government receives its funding from taxes.

levying of a new tax

According to the Central Bank Report of Sri Lanka, the nation is heavily indebted and finds it difficult to maintain services while making debt payments in installments with current income. Due to the current state of the economy, it is difficult to make money through the issuance of bonds because no one has the confidence to purchase them. Therefore, raising taxes or imposing new taxes is the only way to address this.

 

 

How the economy fell apart....

The main tax change for 2019 is the deduction of a sizable portion of income (nearly half) for the government, which creates a shock that prevents withholding on regulating governmental activities and maintaining the balance between earnings and expenditures. 

source:- the annual performance report of inland revenue department of Sri Lanka)

The International Trade Statistics of Sri Lanka by Department of Commerce & Central Bank Report [Exchange Rates] shows that higher import costs than export revenues not only continue to deplete foreign reserves but also cause the SLR to weaken against the USD.  From 2019 to 2022, the government will continue to receive only half of the taxes it is legally entitled to, even as it continues to incur all of its previous expenses improperly.

Therefore, in order to generate the necessary revenue for the current year 2023, the government must make a loss.

Either the government should print money or impose or raise taxes to close that gap and slow the rate of local economic collapse. The government has proposed a tax amendment for 2022 because printing money will lead to inflation by increasing the amount of cash in circulation and causing a shortage of goods in the market, which will raise the price of goods.

Government is powerless to do anything in this situation other than raise taxes. As a result, we concur that taxation is the best course of action right now.

From this point onwards (opinions of the individuals)

The government should effectively use/invest tax dollars so that we can maximize returns and eliminate all unnecessary costs.

Impose appropriate policies, rules, and regulations regarding commerce, foreign investments, corruption, involvement in politics, etc.

Regulate taxation in a way that is fairer, more efficient, and more capable of obtaining taxes from all businesses, regardless of whether they maintain false records or none at all.

Instead of seeking advice from those who have only mastered theoretic concepts, think about those who are currently running successful businesses.

Focus on developing a business/innovation ecosystem that will control and stabilize startups and existing businesses, opening up a variety of revenue-generating opportunities.

Because of the current state of affairs, even taxation is burdensome; as a result, there is high inflation, no change in or decrease in pay, etc. Even the imposition of a 50% tax won't matter if we can create a healthy economy in which people can earn a living. All we need is business knowledge and perception, such as how to identify earning opportunities, how to turn everything into money without throwing anything away, value addition, etc.