The Inland Revenue Department is set to achieve its revenue collection targets for the year as new tax payers are voluntarily coming in to the tax net, Commissioner General of the Department of Inland Revenue, Mahinda Medagoda said. He called for a change of attitude and asked officials of the department to be more people-friendly in their approach.

"The Department of Inland Revenue helps the government collect about 55 percent of its total tax revenue and we have achieved all our monthly targets up to now, and with one more month left to go for the year, we are confident that we would meet the annual target as well," Medagoda said.

He made these comments speaking at the 10th AGM of the Association of Deputy Commissioners of the Department of Inland Revenue yesterday, where the Minister of State Revenue and Finance, Ranjith Siyambalapitiya was the Chief Guest.

"With the end of the war now is the best time to get new tax payers into the fold. We have already seen an increase in new tax payers who have voluntarily come forward to pay taxes and this is an encouraging trend. This means that many citizens are becoming aware of their responsibilities and duties to develop the country," Medagoda said.

Sri Lanka, as in many other countries in the world, experienced stresses in revenue collections because of the global economic crisis and the contraction of trade.

Siyambalapitiya said the government depended heavily on import duties which experienced contractions.

The fiscal deficit has expanded a further 30 percent during the first nine months of this year with revenue improving by 12 percent and total government expenditure and net lending increased by 19 percent while capital expenditure declined 2.7 percent.

There are questions as to whether the government would be able to keep to its commitment of containing the deficit to 7 percent of GDP at the year-end in line with the IMF targets.

The overall budget deficit for the first nine months of 2009 reached Rs. 322.6 billion or 6.5 percent of GDP increasing 30 percent compared to a deficit of Rs. 246.9 billion for the corresponding period of 2008 which was 5.6 percent of GDP, latest data from the Central Bank shows.

The Central Bank said in a recent report that revenue collection for the year would be below the estimated target in the 2009 budget.

"According to revised estimates prepared by the Ministry of Finance and Planning in July 2009, the total government revenue for 2009 would be Rs. 727 billion (14.8 percent of GDP), reflecting a shortfall of about Rs. 127.3 billion compared to the original target of Rs. 855 billion," the Central Bank said.

Tax revenues are expected to fall short against budgeted estimates across the board except in SCL and NBT, according to the Central Bank, but tax revenues are expected to increase by 12 percent during the year from the previous year while non-tax revenue is expected to increase marginally.

Government revenue increased 12 percent during the first nine months of 2009 to Rs. 522 billion due to increases in income tax revenue and non-tax revenue.

The recent IMF review mission to Colombo said that revenues where improving and that although difficult, the 7 percent of GDP deficit target was achievable.

Medagoda told the tax officials that they should not collect taxes in an ad-hoc manner which was burdensome and authoritarian.

"We should realise that it is the tax payer that allows the government to carry out its plans so we need to adopt in a more friendlier approach when dealing with tax-payers. We cannot continue to be forceful with those who already pay taxes. Instead, we must try to bring in those outside the tax net.

"We must respect the tax payer and treat them with dignity and there should be no arrogant behaviour. There are times you have to be forceful but broadly, I do not condone arrogance towards the tax payer," he said.

Siyambalapitiya said the government’s policy was to widen the tax net instead of burdening those who already pay taxes.

"Many seem to think that taxes are a form of fines. But this is not the case. Any government relies on taxes to serve the people. With the war over, many people are beginning to realise they have a responsibility to pay taxes and help the country move forward.

"So now is the time to adopt a people-friendly approach in dealing with existing tax payers and brining in to the fold new tax payers," he said.

Meanwhile tax officials told minister Siyambalapitiya that they had to work under trying conditions to meet the revenue collection targets.

"We do not have enough vehicles in which to do our rounds. We get second-hand vehicles that have been used by the Treasury and these are prone to break-downs. The Computer system is also constantly malfunctioning and there are not enough machines. There are divisions comprising 15 to 20 officials and only two computers," President of the Association of Deputy Commissioners, P. G. K. Samarathunga said.

"There are many burdens and obstacles we have to encounter when collecting taxes and despite these, we are doing our best. The government must try to improve working conditions if tax collection and administration is to be more efficient," he said.

Anomalies in transfers, delayed promotions, inadequate training, poor personal transport facilities and taxing bonuses and other incentives were some of the other grievances Samarathunga brought to the notice of the minister.