Colombo (LNW): The government of Sri Lanka is set to roll out two additional taxes next year, namely, the ‘wealth tax’ and the ‘inheritance tax,’ according to a recent report by Sunday Times.
These upcoming taxes aim the boosting of the state’s revenue stream, especially in light of the underwhelming tax collections recently, which are yet to be met with the anticipated revenue projections.
A detailed analysis presented to the legislative body by the Committee on Fiscal Planning and Strategy highlights that the duty of devising the necessary frameworks for these potential tax systems rests on the shoulders of the Finance Ministry.
One of the primary reasons behind this move is the persistent budget shortfall the government has faced, primarily stemming from the expenses surpassing the revenue.
Notably, the fiscal shortfall during the first half of the year amounted to Rs 1.24 billion. Such a deficit was a consequence of the delay in repaying the international loans since last April and the enhanced state spending relative to the prior year’s first half. This included doubled interest outlays.
The government’s three pivotal revenue-collecting bodies, i.e. the Customs Department, the Inland Revenue Department, and the Excise Department, demonstrated underperformance in their tax collection duties during the 1H23.
The statistics reveal that the Inland Revenue Department gathered just Rs 696.94 billion, which is 41.81% of the targeted Rs 1.667 trillion. Similarly, the Customs collected Rs 400.07 billion, which is only 32.79% of its set goal of Rs 1.22 trillion. The Excise Department managed to amass Rs 88.963 billion, just 41% of its projected Rs 217 billion target.
Further, there are recommendations in the report suggesting enhancements to the existing digital tax-collection system, RAMIS 2.0. This comes in anticipation of the upcoming tax changes, and there are considerations to renew the contract with the Singapore-based firm responsible for the platform’s development and maintenance.
