Revenue on excise, vehicle tax jumps over 20pc

Economic downturnSri Lanka’s government revenues jumped by more than a fifth in the first seven months of this year, data showed on Thursday, as the new government sought to improve tax collection and cracked down on corruption.

The data were released ahead of a parliamentary election on Monday in which the United National Party-led minority government formed in January is seeking a strengthened mandate.

Sri Lanka does not usually release interim figures, but the data showed that total tax revenues had risen from January through July by 20.5 percent, year on year, to 646.2 billion rupees ($4.8 billion).

Revenues from excise tax jumped over 123 percent to 251.6 billion rupees, 73 percent of the full-year target.

“The reason for this increase is due to the crackdown on smuggled tobacco products and distilleries, along with distribution networks which were earlier flirting with tax authorities and cashing in on their political patronage,” said Danushka Samarasinghe, research head at Softlogic Stockbrokers.

Since taking office in January, the administration of President Maithripala Sirisena has taken steps to reduce corruption it says prevailed under his predecessor Mahinda Rajapaksa.

Rajapaksa is staging a political comeback and heading the opposition campaign in the Aug. 17 vote.

Finance Minister Ravi Karunanayake told Reuters the excise tax take had been on the rise due to the streamlining of collection and reducing corruption and tax evasion. Income from motor vehicle imports more than doubled to 126.1 billion rupees in the same period, recording 97 percent of the full-year target.

Samarasinghe said the rise in the vehicle import duty was due to the rising demand for automobiles mainly from state workers who benefited from hikes in government pay while an April rate cut by the central bank had reduced borrowing costs.(Reuters)

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