By:Staff WriterColombo (LNW): Sri Lanka has missed the first quarter revenue target of Rs 782 billion due to inefficient tax collection procedure of the Inland Revenue Department (IRD) Senior government minister claimed.
State Minister of Finance Ranjith Siyamablapitiya noted that the IRD has actually collected Rs 316 IN 1Q 2023 making shock waves for IMF representatives who visited the island nation recently.
According to finance ministry estimate, the expected revenue in 2023 is Rs. 3415 billion its major portion of tax revenue is Rs. 3130 .
This clearly indicates that the government is receiving only Rs 500 billion from all other means including the treasury contributions from SOEs to the consolidated fund.
The million dollar question is as to how the government is to bridge the massive deficit of 60 percent of the country’s revenue in 1Q 2023 as it has collected only 40 percent of the targeted revenue.
State Minister of Finance Ranjith Siyambalapitiya told Parliament that despite projections the Government would fall short of its excise revenue target by 30% there will be revision to the tax on alcohol products.
Siyambalapitiya told the house that following the price increase in January with new excise tax by over 20%, excise revenue from alcohol sales had dropped 7.4%. March, which is usually a high volume month, had seen a dip in production this year of almost 40%.
The State Minister said it is anticipated that some products can maintain volumes despite price increases, and alcohol had been listed as one of them, but the recent events had proven this theory wrong.
He also noted that whilst it is good to reduce alcohol consumption, it has been observed that consumers have turned to cheaper illegal alternatives, and therefore a discussion has begun on finding ways to tackle this problem, without reducing prices.
He noted that in the current situation the Government has lost revenue, but consumers continue to drink unregulated products that can pose further burdens to the economy.
The Minister said prices of all goods have increased according to inflation and the Government has no intention to provide any exceptions to the alcohol industry.