By Captain CoCo
The IRD’s main intention is to collect revenue to meet government expenses. For this purpose, the IRD often relies on the same taxpayers repeatedly instead of bringing more large taxpayers into the system and developing a balanced and affordable tax structure.
There is no need to explain that a tax assessment and the resulting payment obligation can be an additional and unexpected expense for an individual or a company. Therefore, there are instances where taxpayers are unable to comply with payment requirements as expected by the IRD and become defaulters.
However, the tax administration generally provides a considerable period for taxpayers to settle their dues, with minimal penalties, even though they may face enforcement actions such as bank seizures, interest charges, and penalties.
Taxpayers become defaulters for many reasons, including unexpected assessments, ad hoc policy changes for which they were not prepared, unclear implementation of tax laws, misleading advice from consultants, negligence, or deliberate evasion.
Given these circumstances, decisions regarding defaulters should include procedures to waive penalties where appropriate, grant reasonable time for payment, and provide payment plans. Unfortunately, such practices are not consistently applied at present. Different taxpayers appear to receive different treatment.
Captain CoCo noticed one major case involving an old five-star hotel located in Mount Lavinia. The hotel had a history of delaying the payment of its tax liabilities and frequently provided excuses. However, allegedly due to the influence of a political party or a powerful religious leader, the Commissioner General of the IRD approved the release of the bank seizure notices issued against the hotel.
Yet, there was no payment plan in place to settle the outstanding taxes.
Why do only selected taxpayers receive such privileges?
Where is the fairness?
Where is the equal treatment?
When this happens, genuine taxpayers who make every effort to pay their taxes on time become discouraged.
Captain CoCo is not sleeping. Minister of Finance, please stop favoritism. Support the development of a fair, transparent, and equitable tax culture within the system.