Government revenue as a proportion of GDP has been on a declining trend and it is inadequate to meet its committed current expenditure and debt servicing costs.
The inadequacy of revenue collection is evident when compared with other countries. Sri Lanka’s tax revenue has been well below what it should be about 20 percent of GDP at this stage of development, economic experts said.
Government revenue declined in the first four months of 2019 due mainly to the decline in revenue generated from the excise tax on petroleum and motor vehicles, telecommunication levy and CESS together with contraction of 17.4 per cent in imports and the decline in non-tax revenue, Finance Ministry report revealed.
However, revenue from income tax increased with the simplification of tax structure, strengthening tax administration and tax audit in line with the New Inland Revenue Act effective from April 2018.
Revenue from non-tax declined, reflecting the non-receipt of Central Bank profit transfers in the first four months of 2019, compared to 14 billion recorded in the same period of 2018.
Total revenue from income tax increased to Rs. 104 billion in the first four months of 2019: corporate and non-corporate income tax increased by 10.2 per cent to Rs. 43 billion; revenue from PAYE tax increased by 19.2 per cent to Rs. 18 billion; revenue from ESC increased by 11.3 per cent to Rs. 27 billion.
However, revenue from tax-on-interest declined to Rs. 17 billion in 2019.
(LI)