Sri Lanka’s tax revenues have surged 34.8 percent percent to RS.1.28 trillion up to September 2022 amid high inflation and non-tax revenues also brought in 119 billion US dollars, up 63 percent from a year ago, finance ministry data shows.
Sri Lanka’s economy is expected to inflate to around 23.8 trillion rupees in 2022 from 16.8 trillion in 2021 as the currency depreciated and prices soared in an ‘inflationary blow off’ which is technically known as High Inflation Financial Repression (IFR).
The tax revenue increased by 34.8 percent to Rs. 1,283.4 billion mainly due to the receipts of the one-off Surcharge Tax.
The notable increase in tax revenue from income tax by 106.1 percent to Rs. 431.8 billion, VAT by 38.6 percent to Rs. 310.5 billion, Excise duty on liquor and cigarettes by 32.4 percent to Rs. 207.2 billion, and Ports and Airports Development Levy (PAL) by 18.7 percent to Rs.135.4 billion helped surge total government revenue, finance ministry mid year final report disclosed.
In the same vein, non-tax revenue increased significantly by 66.8 percent to Rs. 165.1 billion during the first nine months of 2022 reflecting the increase of sales and charges and Central Bank profit transfers.
The revenue generated from domestic consumption-based taxes increased by 38.1 percent to Rs. 401.0 billion in the first nine months of 2022, compared to Rs. 290.5 billion recorded in the same period of 2021.
This was mainly due to the increase in VAT on domestic activities by 44.7 percent to Rs. 193.8 billion.
Meanwhile, revenue from the tax on liquor increased by 32.2 percent to Rs. 124.6 billion reflecting the increase in excise duty rates on liquor introduced by the Budget 2022 and the successful implementation of the security features and security features management system with effect from January 2022.
Revenue generated from cigarettes increased by 32.6 percent to Rs. 82.6 billion in the first nine months of 2022 due to the revision of excise duty on cigarettes in November 2021.
Revenue from import-based taxes increased slightly by 3.3 percent to Rs. 425.6 billion in the first nine months of 2022, compared to Rs. 411.9 billion recorded in the same period of 2021 mainly due to the increase in import-based VAT by 29.5 percent to Rs 116.7 billion and increase in Ports and Airports Development Levy (PAL) by 18.7 percent to Rs. 135.4 billion amidst the contraction in tax collection by Customs Import Duty (CID) and Special Commodity Levy (SCL).
Revenue from CID declined considerably by 29.4 percent to Rs. 36.6 billion in the first nine months of 2022 mainly due to the import restrictions imposed by the Government as a response to the foreign exchange crisis.
Revenue collection from SCL also declined considerably by 30.5 percent to Rs. 29.2 billion in the same period of 2022 due to the downward revisions of SCL rates on selected commodities to provide a cushion for stabilizing domestic prices.
Revenue collected from Commodity Export Subsidy Scheme (CESS) Levy also fell marginally by 6.5 percent to Rs. 52.8 billion in the first nine months of 2022.
