Government revenue: The ‘Basil’ way

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COLOMBO (News 1st);  The Government revenue has now come to a level that is insufficient to cover the day-to-day recurrent expenditure, says Finance Minister Basil Rajapaksa.

Speaking at the Parliament during the 2022 Budget speech today (12), the Minister said that the Government revenue, which was 21.9% during the period of 1950-1999, has plummeted to 16.3% during 2000- 2009.

After a gradual decline, government revenue further reduced to 9.2 % in 2020 owing to the impact of the COVID-19 pandemic, the Finance Minister said.

The Finance Minister also pledged to make every effort to reduce the budget deficit to 8.8% in 2022, 6.1% in 2024, and 4.8% in 2025 via methods of solid expenditure management, increasing government revenue, and restructuring loss-making public enterprises.

Accordingly, the Government expects to implement several steps.

  • One-time taxes
  • Social Security contribution
  • Increasing Cigarette Prices
  • Excise Tax
  • Motor vehicle accident fee
  • Tax Administration
  • The Leisure license fee
  • Money earned by Perpetual Treasuries Ltd.
  • TRCSL license

One time taxes

The Finance Minister proposed a one-time tax surcharge of 25% to be imposed on persons or companies with taxable income over Rs. 2,000 million for the year of assessment 2020/2021. Rs. 100 billion is expected to be earned through this tax.

Moreover, VAT on banks and financial service providers, under supply of financial services, by specified institutions is proposed to be increased to 18% from 15%. This tax should be paid monthly from 01 January 2022 to 31 December 2022.

Furthermore, this tax should not be shifted to the customer. Rs 14 billion is expected to be earned through this tax.

Social Security Contribution

Aiming to rebuild Sri Lanka economy affected by the Covid pandemic, a “Social Security Contribution” was proposed by the Minister of Finance. This contribution will be charged at 2.5% on the annual threshold turnover exceeding Rs. 120 million.

Rs. 140 billion is expected as revenue through this contribution and this will be effective from 01 April 2022.

Tax on Cigarettes, Excise tax and Motor Vehicle tax

Tax Administration

The Finance Minister mentioned that this Government seeks to simplify the tax administration and improve its efficiency. For this, it is proposed to further strengthen the Large Tax Payers Unit (LTU) and Upper Corporate Unit (UCU) to improve revenue collection from large tax payers.

Similarly, it is proposed to remove weaknesses in the digital revenue collection systems of the revenue collection bodies; Revenue Administration Management Information System (RAMIS) of the Department of Inland Revenue and Single Window System of the Sri Lanka Customs.

In addition, it is proposed to expedite the implementation of the digital revenue collection system of the Excise Department and simplify the excise licensing process.

Furthermore, it is proposed to introduce a mechanism to examine the accuracy of the tax documents when filing through the above systems and allow, at every possibility, to present digital invoices and documents as valid documents.

The Leisure license fee

It has been proposed by the Finance Minister to issue a license under goods and service tax for the designated areas to be developed as special zones for leisure activities.

Money earned by Perpetual Treasuries Ltd.

TRCSL license

Author: desi123 is an online news portal that aims to provide the latest trendy news for Asians living in Asia and around the World.

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