Annual Report 2008 - Ministry of Finance and Planning

4. Reform Initiatives
192
TERMS OF REFERENCE – PRESIDENTIAL COMMISSION ON TAXATION
• Propose reform initiatives to be implemented to bring about more transparency in the tax system through greater
coordination between different revenue administration institutions such as the Inland Revenue Department, Sri Lanka
Customs and the Board of Investment and suggest how such institutions and other investment promoting institutions
such as the Export Development Board and the Industrial Development Board could be harmonized to augment revenue,
while also proposing desirable changes to the associated legal framework to facilitate this process.
• Study the adequacy of skills involved in tax administration in the backdrop of major challenges associated with revenue
collection efforts, while recognizing gaps, lapses or anomalies relating to procedural and internal controls that have
left room for possible malpractices and abuses, and propose desirable institutional and capacity building measures to
overcome such drawbacks.
• Study the extent to which Information Technology is being used to facilitate revenue collection efforts and propose as to
how best Information Technology could be used to link revenue collection agencies and investment promotion agencies
to enhance efficiency and bring about a compliant and taxpayer friendly investment climate.
• Propose as to how the relationship between the Ministry of Finance and Planning (MOFP) and the IRD, CD and ED
could be strengthened in terms of policy formulation, implementation and performance review, while ensuring that the
MOFP could perform an effective supervisory control in discharging its duties in terms of the Constitution, while also
facilitating effective functioning of the 3 departments.
‘MATHATA THITHA’
In line with ‘Mahinda Chinthana’ policy framework which
promotes Mathata Thitha – A Stop to Liquor Consumption, the
Excise Department has adopted an approach that discourages
liquor consumption, despite related adverse impact on revenue.
In this backdrop, several programs have been initiated since
2005 to reduce liquor consumption. Regular upward revisions
of excise duties are imposed on liquor in order to discourage
consumption. Further, issue of new excise licenses have also
been curtailed and such licenses are generally issued only to
Tourist Board approved hotels.
chart 4.1
As can be seen from the following Table, although there
had been a 4 per cent increase of hard liquor production in
2007 over 2006, it has reduced by 2 per cent in 2008 over
2007. Although a decrease in hard liquor production can be
seen in 2008, the soft liquor production has increased by 15
per cent. However, the annual total excise revenue increase
as a percentage has dropped from 25 per cent in 2004 to
14 percent in 2008 reflecting an overall declining revenue
trend.
Year
Table 4.5
Annual Hard Liquor Production
Hard Liquor
Production
proof Ltrs
- Million
Increase
2003 32.0 -
2004 34.5 8
2005 38.5 11
2006 45.4 18
2007 47.2 4
2008 45.72 -2
%
Source; Department of Excise
Ministry of Finance and Planning Sri Lanka
Annual Report 2008