Annual Report 2010 - Ministry of Finance and Planning

Ministry of Finance and Planning Sri Lanka > Annual Report 2010Table 2.9 > Variance Analysis of Government RevenueItemBudgetRs. Mn2010ActualRs. MnRemarksIncome Tax 160,344 135,623 The decline of the share of withholding tax on interest income arising fromthe drop in yield rates on government securities. ESC exemption granted tocertain exports and domestic factories coupled with exemption granted toTRC since 2009 caused a further negative impact in income taxes. Restrictionof increments, increased labour turnover were negatively affected tothe performance of PAYE tax.VAT 206,730 219,990 Revival of manufacturing and services sectors, revitalization of domestictrade activities and tourism sector in the post-conflict environment,increase in the collection of VAT on imports particularly due to the increasein motor vehicle imports as a result of reduction of import duties on vehicleimportation w.e.f. 01.06.2010, declined amount of VAT refunds due to efficientmonitoring measures taken by the IRD and revenue boom of subcontractors in construction industry due to expansion of the economicactivities are the major contributors.Excise Tax 120,768 129,864 Upward rate revision of all categories of cigarettes and liquor contributedpositively for the excise tax collection. Increased imports due to lashingof high excise duties applied on motor vehicles and increased demand forpetroleum products with the opening up of new markets in North and Eastalso contributed.Import Duty 85,107 64,165 The granting of customs duty waiver on petrol and diesel effective throughoutthe year and duty waiver on wheat grain during the 1st half of theyear, reduction of taxes on milk powder, the removal of the import dutysurcharge and increase of the number of goods imported under duty freeor nominal duty status with the coverage of free trade agreements.Special CommodityLevy24,889 10,173 The removal of the Special Commodity Levy on rice during the first quarterof the year and reduction in tax rates on dhal, sugar, B’ onion and Potatoetc during the year were attributable to this decline.Ports and Airports42,012 49,632 Increase in the value of imports.Develop-ment LevyNation BuildingTax30,212 46,022 Impact of the upward revision of the NBT rate to 3 percent in May 2009,imposition of NBT on telecommunication services, revival of the economyand the significant increase in the imports helped achieve this improvement.Other Taxes 63,002 69,279 Improvement of domestic economic activities and more lending in thebanking sector improved the revenue from debit tax while the revival ofthe construction and related services had a positive impact on mortgagesresulting in an increase in stamp duties. Revenue collection from Cessdeclined mainly due to the removal of the Cess on selected imports andthe reduction in the Cess on imports of raw materials for the constructionsector, including cement.Non TaxRevenue84,722 92,532 Profit transfers of state banks, transferring surplus funds from governmentinstitutions and levy of Rs.10 billion on TRC were attributable for this increase.However, interest income declined due to the low interest rates thatprevailed in 2010.155