It is wrong to assess the constitutionality of a proposed tax system on the basis of a prior tax system that has proven to be economically flawed, the Supreme Court said.
This was noted in the judgement delivered by a three-judge bench on the fundamental rights petitions filed against the Inland Revenue (Amendment) Bill.
During the hearing for the petitions, the Attorney General drew the attention of the Court to the proposed tax structure and submitted that the proposed tax rates appeared excessive only because the petitioners sought to compare it against the reduced tax rates introduced last year.
“We are not privy to the reasons for the introduction of reduced tax rates in 2019 and 2021. Nevertheless, they have been identified as a grave error that has eroded government revenue. It is wrong to assess the constitutionality of the proposed tax system on the basis of a prior tax system that has proven to be economically flawed,” the judges said.
Justices Buwaneka Aluwihare PC, Murdu N.B. Fernando PC and Janaka de Silva further ruled the petitioners had not established that the proposed tax system “is manifestly unreasonable or manifestly discriminatory.”
Some petitioners had also submitted that there had been corruption and mismanagement of public finances which had led to the present economic predicament. Accordingly, it was contended that it was unreasonable to get the people to pay higher taxes to overcome the situation.
“This court is exercising its constitutional jurisdiction over the Bill. These are not matters which we can take into consideration in this exercise. Nevertheless, we are mindful that the court is the last bulwark to protect the rule of law and prevent any breach of public trust. Corruption and wastage of public finance must be addressed and violators dealt with according to the law irrespective of standing. To do so, the jurisdiction of court must be properly invoked in the appropriate proceedings,” the judges said.
Accordingly, the Supreme Court held that, subject to the amendments proposed by the Attorney General being moved at the committee stage of the bill in Parliament, the bill and its provisions were not inconsistent with the Constitution.
(curtesy Sunday Times)