Indirect tax collection misses the target

Indirect taxes have made a considerable contribution to government revenue but the revenue collection departments - the Inland Revenue, Customs and Excise have missed the set targets, a Government Audit report has observed.

It has been revealed that only the growth in the income collected is not sufficient to measure the real performance of the revenue collection departments.

Enhancement in the income on tax as a result of the growth in import cost was due to the decline in the foreign exchange rate, a senior official of the Inland Revenue Department said.

Another shortcoming was the failure to maintain actual income records in government institutions mainly provincial councils and local government authorities.

As per the annual estimates of 2018, the income estimate of Provincial Councils was Rs. 99 billion but records have not been maintained on the actual income relevant to the revenue.

According to audit observations, the tax imposed on local goods and services out of the tax income collected during the year 2018 under review amounted to Rs. 1,060 billion or 61.91 per cent of the total tax income and 54.78 per cent of the total income of the Government.

In terms of the financial statements of the Government in 2018, more that 27 per cent from VAT on local goods and services and Nation Building Tax contributed to the total state revenue.

The contribution from the tax imposed on alcohol and cigarettes ( Excise) was 5.88 per cent and more than 19 per cent of the total income has been covered from the production tax imposed on cigarettes, alcohol, motor vehicle and petroleum productions.

A sum of Rs. 342 billion has been collected from the tax imposed on international trade which was 19.95 per cent of the total tax income and 17.65 per cent of the total income of t he Government.

However the revenue collection from the taxes imposed on international trade declined by Rs. 30 billion last year, a drop of 7.97 per cent compared to 2017.

The main reason for such a decline is the decrease in import tax by Rs. 40 billion, it was stated.

Even though it was expected to collect income of Rs. 18 billion in 2018 under six revenue codes, no income has been collected by the end of 2018.

An income of Rs. 3 billion remained in arrears under three revenue codes.