REUTERS: Sri Lanka is likely to miss its revenue target this year due to delays in implementing proposals set out in the 2017 budget, a top Finance Ministry official said yesterday.
A raft of proposals including personal income tax, withholding tax and remittance taxes proposed in the budget are yet to be implemented.
A new tax bill, which seeks to ensure that all citizens pay direct taxes and cut indirect taxes, was originally expected to be presented to parliament in April, but will now be presented today.
Raising revenue and reducing the nation’s budget deficit are the key demands by the International Monetary Fund under a US $1.5 billion, three-year loan approved mid last year.
The island nation has targeted revenue of Rs.2,088 billion (US $13.7 billion) this year, a 27 percent rise from last year’s total revenue.
A.K. Seneviratna, Director General of the Fiscal Policy Department at the Finance Ministry, said full-year revenue was expected to be around Rs.1,900 billion, according to the assessment based on July 31 revenue figures.
“There were delays in implementing budget proposals,” Seneviratna told Reuters.
He said the authorities can manage the target budget deficit of 4.6 percent of GDP unless there was a huge variation in interest payments.
The government raised its value-added tax from November last year, while implementing measures to help make it easier to pay taxes, thus helping lift revenue. Revenue has increased 20 percent through July 31 to Rs.1,015 billion, Seneviratna said. He said the government was expected to implement some tax revisions from October 1, including personal income tax and withholding tax, proposed in this year’s budget. The proposals in the new tax bill will be implemented from April next year. The new bill is demanded by the IMF as a condition for a third tranche of aid disbursed in July.