Taxation Assignment -
"The tax system is not delivering the potential revenue in Sri Lanka. Sri Lanka's per capita income has increased from US$ 720 in 1995 to US$ 3,625 in 2014 but our tax revenue has declined from 20.4 % GDP to 12.8 % GDP during this period. Almost 90% of revenue comes from taxes (10% is accounted by non-tax sources). Tax elasticity measures the extent to which the tax system generates revenue in response to increase in income without change in the tax rates. This is less than unity or one and not a healthy sign."(Saman Kalegama, Past Chairman, IPS)
Discuss the above statement commenting on;
i. The fundamental problems in regard to the taxation system in Sri Lanka.
ii. The key recommendations to overcome above loopholes and strengthen the tax base in Sri Lanka.