Economists criticized government moves to dip into the Cess funds belonging to State entities such as the Sri Lanka Tea Board and the Sri Lanka Tourism Development Authority.
Professor at the Department of Economics of the Faculty of Arts of the University of Colombo, Prof. K. Amirthalingam said that the practice of collecting the Cess tax is that it is collected for a specific purpose.
“Sri Lanka, however, has no guaranteed measure in place with regard to this particular tax,” he pointed out.
He said the tax system in place in the country was not elastic, adding that when the gross domestic product goes up simultaneously the tax revenue too should increase. “What happens here is that we have tax buoyancy in that we adjust the tax rate and collect direct revenue.”
“Tax evasion and avoidance is a very serious problem in Sri Lanka,” he reiterated, adding that the tax rate including of Cess should be reduced and the tax base which is expanding at a sluggish pace must be expanded rapidly.
“In India, Cess is collected in the context of education, for purposes of spending on education. Such a tax can also be charged from the media and the media can be a contributor for the improvement of the media industry,” Prof. Amirthalingam mentioned.