ECONOMYNEXT – Sri Lankan government tax increases have begun to yield results in the first four months of 2016, with revenue from import duties alone up by 73.9 percent to Rs. 48.4 billion from a year ago mainly from higher duty rates.
The finance ministry said the tax hikes had further strengthened the government’s fiscal consolidation process as reflected in the increased revenue.
Total revenue increased by 19.6 percent to Rs. 473 billion in the period of 2016, compared to Rs. 395 billion recorded in the same period of 2015, finance ministry data showed.
The tax revenue increased by 22.3 percent to Rs. 441 billion in the period, compared to Rs. 361 billion in the same period of 2015.
But non-tax revenue declined by 8.8 percent to Rs. 31 billion in the first four months of 2016 from Rs. 34 billion in the same period of 2015.
The revenue from Value Added Tax (VAT) on domestic consumption increased by 16.9 percent to Rs. 51,342 million in the first four months of 2016.
The finance ministry said this was due to the better performance of sectors such as wholesale and retail trade and banking and insurance.
However, revenue from VAT on imports marginally increased by 1.6 percent to Rs. 28,574 million due to a “modest performance” in the external sector, it said.
The revenue generated from Nation Building Tax (NBT) on domestic activities increased by 22.4 percent to Rs. 10,716 million while NBT revenue from imports increased by 28.2 percent to Rs. 6,024 million in the period.
The revenue from excise duty on liquor and cigarettes increased by 25.9 percent and 12.8 percent, mainly due to the upward duty rate revisions on liquor and cigarettes coupled with increased production of hard liquor.
Revenue from excise duty on petroleum products shot up 614.7 percent to Rs. 17,221 million during the first four months of 2016, compared the same period of 2015.
This was because of increased demand for petroleum products stemming from the reduction of retail prices of petrol and diesel and the rise of vehicle fleet by 11.6 percent in the review period.
Revenue generated from Special Commodity Levy (SCL) grew by 6.1 percent to Rs. 21,119 million in the first four months of 2016 owing to the rate revisions made in selected commodities to support domestic production.
Revenue from Ports and Airports Development Levy (PAL) increased significantly by 56.7 percent to Rs. 27,406 million reflecting the increased PAL rate to 7.5 percent from 5 percent and the revision of the concessions granted items in January, 2016.
The finance ministry said revenue collected from commodity export subsidy scheme (Cess) also increased by 54.1 percent to Rs. 18,674 million benefiting from the increased rates of Cess.
(COLOMBO, July 04, 2016)