Tuesday, July 23, 2024

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Government Revenue ascends by 44 percent to Rs. 916 billion in first quarter 2024

By: Staff Writer

June 13, Colombo (LNW): The Government revenue has increased by 44% to Rs. 916.2 billion in the first quarter, according to the Ministry of Finance.It said the increase is due to revenue-based fiscal consolidation efforts.

The sharp rise of 44% augurs well for the Government’s aggressive stance of enhancing revenue.In 2023, Government revenue as a percentage of GDP rose to 11.1% from 8.4% in 2022.

The total Government revenue including grants surpassed its historically high level of Rs. 3 trillion to Rs. 3,048 billion up by Rs. 1 trillion or 54% in 2023 from Rs. 1.97 trillion in 2022.

Tax revenue rose by 187% to Rs. 2,720 billion from Rs. 1.751 billion in 2022.Non-tax revenue rose to Rs. 328.3 billion from Rs. 228 billion.

The Ministry of Finance attributed several factors to the significant improvement of Government revenue. Among them, tax policy reforms together with enhanced tax administration including reforms to broaden the tax base and improve compliance have played a pivotal role.

Income Tax demonstrated significant growth driven by substantial increases in revenue from corporate and non-corporate tax (by Rs. 608.2 billion), Advanced Personal Income Tax (APIT) (by Rs. 145.0 billion), and Withholding Tax (WHT) (by Rs. 157.9 billion).

 These increases were the result of revisions to tax rates, rationalisation of tax slabs, and reduction of tax-free thresholds with effect from 1 January 2023, and realisation of the full effect of tax policy measures in 2023.

 Further, there was a considerable increase in revenue from taxes on  goods and services, primarily due to an increase  in revenue from Value Added Tax (VAT) (by Rs. 694.5 billion) resulting from increasing the VAT rate, reduction of the VAT registration threshold,  and removing VAT exemptions on condominium housing apartments.

The revenue from the Social Security Contribution Levy (SSCL) increased to Rs. 216.2 billion in 2023, owing to the realisation of the full impact of the SSCL following its implementation on 1 October 2022.

This increase was mainly due to the rise in the tax revenue to GDP ratio by 2.5 percentage points and the non-tax revenue to GDP ratio by 0.3 percentage points.

This ratio exceeded the envisaged annual estimate of 10.1% for 2023 by 1 percentage point. At 11.1% of GDP in 2023, Government revenue has recovered to only 0.8 percentage points below the Government revenue to GDP ratio of 11.9% in 2019 prior to the tax policy changes implemented at the end of 2019.

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