Annual Report 2008 - Ministry of Finance and Planning

2. Fiscal Developments - 2008
59
Other Taxes
Cess
The focus on Cess in the year 2008 was directed mainly
to make domestic industries and producers viable in the
backdrop of the adverse competition arising from the flood of
low priced imported products, import of non essential goods
to the country and to recycle such revenue collection for
export development. Rate revision and extension on scope
of Cess brought for the above purposes, in turn generated
Rs. 23,383 million in 2008, a 36 percent increase over the Rs.
17,157 million in 2007. The revenue from Cess has shown
a steady buoyancy of 0.5 as a percentage of GDP as well
as 1.5 as a percentage of total imports over the past two
years compared with 0.2 percent of GDP and 0.6 percent of
total imports in 2006. The buoyant revenue performance of
Cess has also contributed to ease the burden of absolute
or comparative low price-competition posed by certain
imported products on domestic production and the gradual
decrease of revenue from international trade, as evidenced
from the reduction of import duty revenue to 1.9 percent of
GDP in 2008 from 2 percent in 2007.
Over 55 percent for the total Cess revenue flowed from
textile and textile articles, vehicles, food items and paints
and cosmetic preparations of which either the rates were
revised or new items were brought to the base in the year
2008. Compared to the year 2007, around 190 percent
increase in Cess revenue was shown in the category of
textile and its articles mainly due to the inclusion of almost
all textile items to the Cess base in 2008. Cess from vehicles
increased by over 90 percent with the upward rate revision
from 5 to 10 percent. Rate increases applicable to food
items and cosmetic preparations raised in most cases by 10
percentage points, were able to increase their contributions
by over 35 percent and 80 percent respectively.
Port and Airport Development Levy recorded a 17 percent
growth in 2008 and generated Rs. 31,017 million despite
the exemption granted for imports that are used for exports,
concessionary rates applicable on certain medicines and
machinery and equipment.
The Regional Infrastructure Development Levy which was
introduced on motor vehicles, other than those vehicles
used for goods and public transport, land vehicles and three
wheelers generated Rs. 2,599 million compared to Rs. 1,481
million in 2007. Despite the slowdown in vehicle imports,
the scale up of the rates by 2.5 percent helped to increase
the revenue from this tax.
Stamp duty imposed on selected instruments generated Rs.
3,751 million, a decline of 7 percent from the levels in 2007.
The slowdown in sectors such as construction and activities
related to mortgage etc contributed to the reduction in
stamp duty collection. Debit taxes stood at Rs. 8,410 million
in 2008 recording a growth of 17 percent over 2007.
The revenue collected from cellular mobile phone levy which
generated Rs 8,049 million in 2008 was extended to cover
the fixed line phones from January 2009.
Changes in Other Taxes
Rate Changes
• Regional Infrastructure Development Levy rate was
increased by 2.5 percent from January 2008 to the
following rates based on the cylinder capacity of motor
vehicles other than agricultural land vehicles, three
wheelers, vehicles used for goods and public transport.
up to 1,600 cc - 5.0 percent
1,600 to 2,000 cc - 7.5 percent
Above 2,000 cc - 10.0 percent
• Cellular Mobile Phone Subscribers Levy was extended
to cover both mobile and cordless phones at a 10 percent
rate. The fixed line telephones were also brought under
this levy with effect from January 15, 2009.
• Social Responsibility Levy was increased from 1 to 1.5
percent in support of further strengthening the National
Action Plan for children.
• Stamp duty on renewal of liquor license fee was
increased from Rs. 1,000 to Rs. 10,000
Ministry of Finance and Planning Sri Lanka
Annual Report 2008