Broaden tax base without counting too much on motor vehicle import duties - IMF

Colombo, June 1 (Daily Mirror) - The International Monetary Fund (IMF) has stressed the need to broaden the tax without counting too much on motor vehicle import duties, income tax or VAT, according to an official.

The IMF recognized the improvement in revenue mobilization last year, but attributed it to the windfall from motor vehicle import duties, import taxes and under-spending in capital expenditure.

"Last year was a very, very strong year for revenue, more than double the targets that we've had for the primary fiscal surplus, for example. We are very happy and see the significant fiscal space that has been rebuilt because of that. Now, it is important to know that this out-performance, strong over-performance in fiscal revenue last year was primarily due to the very large windfall from motor vehicle duties and import taxes and some under-performance, under-spending rather, in capital expenditure," IMF Mission Chief Evan Papageorgiou told a news conference last week.

He said ,"we want the tax base to be broad and not to be penalizing or putting too much weight on one particular item such as motor vehicle imports, income tax or VAT or anything like that. It should be a broad tax system and a wide net.

He said the government's revenue from taxation should go back to the country and help the economy grow faster.