Government introduces new taxes to raise revenue
Regaining the targeted tax revenue for 2021 has become a herculean task in the prevailing economic conditions triggered by the COVID-19 second wave which seems like never ending, several economic experts and financial analyst said.
But the government is determined to turn the tide to a satisfactory level by introducing a new tax structure for the year 2021 streamlining the tax collection process online, Inland Revenue Department (IRD) sources confirmed.
The IRD has extended the final date of paying taxes for the fourth quarter till the end of February next year, a senior official of the department told the Business Times.
In a bid to collect sizable tax revenue of around Rs.51 billion for 2021, the government has introduced a revised Cess tax on imports in addition to normal import duty on 2534 items including some essential commodities which is expected to lead to an increase in prices of key commodities.
Accordingly the Cess on imported commodities per kilo and unit of other items has been fixed at 5,15,30,35, 45 and 50 per cent from the imported price of the 2534 items which is effective from January 1, 2021.
However under the Special Commodity Levy Act this Cess will not be applicable for 26 commodities including sugar, palm oil, coconut oil, canned fish, dhal, and big onions.
This move has been made immediately as the Budget 2021 has not indicated revenue measures in the budget speech presented by Finance Minister and Prime Minister Mahinda Rajapaksa in parliament recently.
The relevant regulations and directives have been sent to the government printer to publish in a gazette notification by the Director General of Trade and Investment policy Department, Treasury sources revealed.
A new Goods and Services Tax (GST) was proposed in lieu of various taxes and levies imposed under different Acts and administered by different government departments.
The new tax, one of the key proposals in the budget, will be determined before its implementation from January; a senior Treasury official disclosed adding that the estimated revenue from this tax would be over Rs. 670 billion.
The Government is expected to raise around Rs.1.7 trillion from direct and indirect taxes next year, provisional data and economic model calculations revealed.
It will also take necessary corrective measures as and when needed considering the present situation as a one-off, temporary issue which has arisen because of COVID-19, the senior Treasury official said.