By: Staff Writer
Colombo (LNW): Sri Lanka Customs has warned the Finance Ministry that it will fall short of its revenue targets for 2023 by at least Rs. 450 bn unless the government abolishes the ban on vehicle imports as well as restrictions on other imports immediately.
The top Customs management recently told the Sectoral Oversight Committee (SOC) on National Economic and Physical Plans that the Finance Ministry had been appraised of their inability to meet anticipated revenue targets.
Capital Alliance Group COO Kanishke Mannakkara on Saturday suggested that the Government should open up vehicle imports which could garner Rs. 450 billion in tax revenue.
Speaking at a pre-Budget webinar organised by the Daily FT and other stakeholders, the CAP official said that given the pent up demand, import of vehicles could garner higher taxation.
He insisted this approach was more meaningful than tinkering with other smaller revenue measures or resorting to unethical retrospective and super gain taxes.
Mannakkara said that in 2024 if allowed, vehicle imports could rise to $ 1 billion enabling the Government to raise Rs. 450 billion in taxes out of Rs. 3 trillion required.
He was of the view that higher imports in 2024 would increase income from levies and taxes.
It was pointed out that despite scepticism, the motor industry is an integral part of the economy.
Sri Lanka imposed a ban on vehicle imports in early 2020 due to a severe balance of payments crisis that ultimately led to declaration of bankruptcy in April 2022.
The SOC has been told that the maximum Customs could collect this year is Rs 783 bn under the present circumstances.
The all-party committee has also been informed that approximately 20 percent of Customs revenue was earned through taxes imposed on vehicle imports.
Therefore, the vital unit couldn’t be expected to succeed unless the government created the much needed requirement.
Customs, Inland Revenue and Excise Departments account for more than 90 % of government revenue.
Customs also pointed out that since 2014 they never collected revenue more than Rs 1,000 bn. During the 2014-2022 period, 2014 had been the best year with Customs revenue collection reaching Rs 923 bn mark at the time the late Mangala Samaraweera served as the Finance Minister.
Of this amount, Rs 194 bn had been collected as taxes imposed on vehicle imports, the parliament said. The statement issued by Parliament quoted Customs as having said that Rs 150 bn could be collected by the end of this year if ban on vehicle imports was done away with immediately.