Hon. Kabir Hashim

¶ 01 Hon. Deputy Speaker, I speak for the Opposition on the Inland Revenue (Amendment) Bill to amend Act No. 24 of 2017.

¶ 02 A successful tax system rests not on coercion but on trust, fairness, credibility and a strong social compact. From 1977 to 1994, such a compact existed; tax revenue reached about 22 percent of GDP, comparable to Singapore, Malaysia and Thailand, collected largely from large corporates and the wealthy—there was no VAT then, and the poor were not burdened. Those revenues funded major social programmes: free schoolbooks, uniforms, school meals; Mahapola; Janasaviya; and the Ten Million Houses programme. Subsequent political shifts eroded revenue to below 7 percent of GDP and the country went bankrupt—this is the cost of breaking the social compact.

¶ 03 On the present Bill: the Government has reportedly withdrawn several Clauses following five Supreme Court petitions, including Clause 28—we welcome that. I focus on Clauses 31(4) and 34.

¶ 04 - Clause 31(4) (new Sections 163(4A)-(4H)) empowers the Commissioner-General to issue a certificate of default to a Magistrate so that tax in default is treated as a fine for a criminal offence, while Section 163(4C) bars the Magistrate from questioning the correctness of the certificate, undermining judicial power and separation of powers. Section 163(4H) treats the certificate as conclusive even when an appeal is pending. The Court has held these provisions arbitrary, irrational and contrary to Article 12(1), and said they must be amended if passed by simple majority. I urge the Government to amend accordingly.

¶ 05 - Clause 34 inserts Section 185A to criminalize failure to file returns and delayed TIN registration. This is harsh and draconian. Many youths—YouTubers, those earning online, starting new ventures—may lack timely TINs. Criminalizing such administrative non-compliance, with potential imprisonment, is disproportionate and will harass ordinary people.

¶ 06 Courts assess constitutional consistency through a narrow lens; policymakers must consider broader economic, social and democratic impacts. As seen with the 2023 Central Bank Act, analysts flagged macro-operational risks beyond narrow legality. I urge the Government to reconsider and amend these punitive provisions to preserve trust and the social compact essential for a fair and effective tax system.