Govt. aims to achieve 90% of revenue target with additional measures to boost tax revenue

• By Nishel Fernando 

The government plans to achieve 90 percent of the revenue target set for this year by implementing a number of additional strategies aimed at optimising state revenue by the three tax collecting agencies.

 “We are now introducing additional measures to boost tax revenue. With these measures 85-90 percent of our revenue targets can be achieved,” Kapila Senanayake Director of Department of Fiscal Policy at the Ministry of Finance told Mirror Business. 

The government originally targeted Rs.3.13 trillion or 11.3 percent of GDP in revenue for this year. Amid import restrictions, increase in excise taxes and depressed economic conditions, the government is falling behind the original targets.

In this backdrop, the State Minister of Finance Ranjith Siyambalapitiya on Wednesday submitted a report to President Ranil Wickremesinghe proposing strategies to optimise tax collection.

The report encompasses recommendations aimed at establishing a structured framework to attain the revenue goals of the Inland Revenue Department (IRD), Sri Lanka Customs (SLC), and the Excise Department on short, mid and long-term basis.

During the first five months of the year, the revenue and grants rose by 38.1 percent to Rs.1.12 trillion including Rs.1029 billion in tax collection. 

Meanwhile, the recurrent expenditure rose by 48.8 percent YoY to Rs.1.73 trillion, while capital expenditure remained at around Rs.207 billion and interest payments nearly doubled to Rs. 1.06 trillion for the period.

However, the government was able to record a Rs.43 billion surplus in the primary account during the period.

Among the tax collecting agencies, only IRD was able to meet its revenue target of Rs.660 billion by outperforming the target by nearly Rs.30 billion due to new tax measures which expanded the income tax base.

In order to meet revenue targets, the three tax collecting agencies have put forward a number of proposals. Sri Lanka Customs (SLC) has proposed to boost revenue by plugging revenue leakages as well as through full implementation of the single window initiative.

SLC Director General P.B.S.C. Nonis announced that the SLC trade union has agreed to increase contributions from its reward scheme to the government coffers up to seventy percent, while urging the informants to come forward to provide information on such operations. Depending on the accuracy of the information, informants are to receive rewards under the scheme.

Meanwhile, the Excise Department revealed plans to introduce Rs.10 per litre tax on toddy production at the source, which is expected to bring in Rs.156 million revenue per annum.

In addition, it was also proposed to setup special courts to expedite the hearing of tax related matters.

Meanwhile, Minister Siyambalapitiya noted that the government plans to activate the second stage of the Revenue Administration Management Information System (RAMIS) by this September.

The government also plans to enhance monitoring activities of distilleries with mandatory CCTV cameras as well as placing a centralised CCTV systems at SLC.

In the mid to long term, the government is also in the process of introducing new legislation for SLC and Excise Department by replacing the archaic colonial-era legislation. 

President Wickremesinghe is expected to be briefed on a monthly basis on the progress of the implementation of these additional revenue strategies.