Sri Lanka revenue collection slows: report

EconomyNext – Delays in revenue collection by Sri Lanka’s tax administration could hinder the new government’s plans to raise public sector pay and reduce administered prices of foods, a newspaper report said.

The Sunday Times said that the Inland Revenue Department’s monthly revenue performance report up to February 10 showed revenue collection was 2, 928 million rupees, falling short of the five billion rupee target by 2, 803 million.

The newspaper attributed the Inland Revenue Department’s failure to collect taxes to "the lethargic attitude of officials and poor administration at the helm".

The inadequate revenue collection could hinder the 100-day programme of the new government to reduce prices of consumer goods while raising state worker salaries and also hurt economic growth, the paper quoted Treasury officials as saying.

The government will have to find an additional 17 billion rupees to meet the salary hike of public sector employees and pensioners, the officials said.

The reduction of tariffs on essential items, to reduce consumer prices, would compel the government to further cut down state expenditure, they said.

"This combination of reduced revenue and increased expenditure will inevitably result in an increase in the budget deficit and additional borrowing," the newspaper said.

It quoted a senior Treasury official as saying the failure to increase tax revenue will cause pressure to cut capital spending “with a possible adverse impact on growth”.