The Tax Ombudsman’s office received 53 complaints in 2008, of which 39 had been concluded, the Treasury said in its Annual Report for 2008.

"The general nature of complaints received in 2008 is with regard to initiating legal proceedings without giving any hearing to grievances of tax payers," the report said.

Failure to make GST and VAT refunds was also a cause for complaints to be filed with the Tax Ombudsman, retired judge Maxwell Paranagama.

Some tax payers also sought out the Ombudsman looking for permission to pay tax areas on an instalment basis, to defer payments on reasonable grounds, to resolve issues arising because inadequate information were set out in tax returns, and obtain concessions for senior citizens.

The office was created in 2005. That year, 28 complaints were received of which 15 were concluded.

In 2006, 75 complaints had been filed and 49 settled. For 2007 these figures stood at 67 and 35.

"This was the initial step towards creating a forum for tax payers to tender their complaints pertaining to alleged grievances or injustices caused to them in consequence of any maladministration on the part of any officers in the Inland Revenue Department," the Treasury report said.

An old tale...

Sri Lanka’s tax regime has come under constant attack for its poor administration and ad-hoc changes on certain taxes.

The system is too complicated as well, leaving room for inefficiencies in tax collection and administration, leaving room for defaults and frauds.

The 3 percent Nation Building Tax comes at a time when Sri Lanka’s economy is facing contraction. Economists and businessmen say increasing taxes now would not help especially since the government has limited space to provide an adequate stimulus package, especially to the export sector.

For years, the private sector has been calling for reforms to the tax regime.

Partner organisations, such as the Asian Development Bank, have called for a widening of the tax net instead of increasing taxes.

A Presidential Commission on Taxation is expected to submit an interim report in October this year. The commission is expected to streamline the tax regime by the time a National Tax Policy is introduced in 2010.

One analyst suggests the public sector be roped into the tax net.

An expert on Taxation N. R. Gajendran, a senior partner at Gajma and Company, told the Island Financial Review earlier this month that government will have to look for other sources to meet its capital expenditure requirements and also bridge any gap between revenue and recurrent expenditure.

This is because heavy taxes will defeat the purpose.

"What needs to be done is to reduce taxes because it is a matter of survival these days and the government needs to ensure that businesses survive these hard times," he said.

"Any attempts to reform the country’s tax base will first require that public servants be brought in to the tax net. It would not necessarily amount to a significant amount by way of taxes but it will eliminate distortions and make the system work," Gajendran suggested.

"So many people have sacrificed their lives because of the war. Now is the best time to bring about these changes because no one would begrudge them. Every citizen must be in a position to contribute," he said.