The Central Bank of Sri Lanka announced that, following economic disruptions spurred by covid-19 pandemic, government revenue plunged by 27.7% from Rs. 1.89 trillion to Rs. 1.36 trillion during the year 2020.
Tax revisions implemented in 2019, tax concessions granted to businesses as well as the economic impact of the pandemic, have all contributed to the slump.
The following data was also recorded in the Annual Report released by the CBSL.
- total revenue as a percentage of GDP,declined from 12.6% in 2019 to 9.1% in 2020.
- total revenue declined by 27.7% from Rs. 1,890.9 billion in 2019 to Rs. 1,368 billion in the year 2020 (due to low revenue from income tax, VAT, NBT, CESS and excise duties)
- revenue from indirect taxes amounted to 77.9% of total tax revenue in 2020.
- there was a relative decline in non-tax revenue, which declined to Rs. 151.4 billion (a decline of 2.9%)
- as a percentage of GDP, revenue from income tax declined to 1.8% in 2020, from 2.8% in 2019.
- Due to abolition of certain taxes like the PAYE tax, revenue from income tax declined by 37.3% from Rs. 427.7 billion in the year 2019 to Rs. 268.2 billion in 2020,
- due to revisions in personal and corporate income tax rates, revenue from corporate and non-corporate income tax declined by 16.2% from Rs. 272.6 billion in 2019, to Rs. 228.3 billion in 2020.
- as a percentage of GDP, revenue from VAT declined from 3% in 2019 to 1.6% in 2020,
- VAT revenue declined gravely by 47.3% to Rs. 233.8 billion in 2020 from Rs. 443.9 billion in 2019.
- due to lower excise duties on motor vehicles and petroleum products, as a percentage of GDP, revenue from excise duties declined to 2.2% in 2020, compared to 2.7% in 2019.
- revenue from excise duty on liquor as well as cigarettes and tobacco, increased by 8% and 4.8% to Rs. 94.3 billion and Rs. 121 billion, respectively, in 2020.