COLOMBO: Sri Lanka’s revenue has increased by 23 percent during the first 9 months of this year compared with the same period in 2015, says M.Ali Hassen, Director of Information in the Ministry of Finance.
“State revenue in the first nine months of 2016 rose to Rs. 1,180 billion from Rs. 959 billion earned during the same period in 2015, “ Hassen said.
Finance Minister Ravi Karunanayake attributed the rise in income to increased efficiency and the curbing of corruption in the collection of revenue by the Sri Lanka Customs, the Inland Revenue Department and the Excise Department. A large percentage of State revenue is from income taxes. This has increased to SLR 1067 billion from Rs 882 billion on Year on Year basis within the first nine months of this year
During the last few years, due to increased heavy public debt, revenue gradually came down to 11 percent of the GDP in 2014. But due to the reforms in the tax collection process, State revenue is expected to increase to 13.5 % of the GDP by the end of this year.
Minister Ravi Karunanayake said that the government would be able to cover the recurrent expenditure through State revenue this year. During the previous regime, State revenue was not sufficient even to cover debt servicing since 2011.
The Finance Ministry claims that if State revenue goes up to 13.5% of the GDP by year end, the deficit will also come down from LKR 573 billion in the first nine months of last year to LKR 506 billion this year enabling the government to reach its deficit target of 5.4% conveniently by the end of the year. The government is in the process of implementing a series of focused legislative, administrative, institutional and capacity improvement measures for revenue and expenditure management.
Accordingly, Budget-2017 has paved the way for allocation of funds to line ministries and the Provincial Councils based only on the action plan submitted by them considering the government’s priority areas deviating from the hitherto practiced policy of allocating fund based on the previous year’s list of expenses The system of zero-based budget allocation, commenced with the budget 2017, is a prelude to introducing the performance-based budget by the year 2020.
Meanwhile, the government has initiated several reforms to improve tax administration with minimal enforcement costs enabling the automation of the tax system. This will give tax payers a number of web-based services such as registration, returns, tax payment, collection and appeals. Further, the changes introduced under the budget -2017will help deviate from the heavy reliance on Indirect Taxes gradually.
