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Methods to increase the government revenue from the perspectives of Inland Revenue Department

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Question: The government revenue has visibly come down during the year 2021. Even prior to that, revenue generation has been a perennial issue in Sri Lanka. Assume that you have been appointed as an Advisor to the President, make recommendations to increase the government revenue from the perspectives of Inland Revenue Department, Customs Department and the Excise Department.

Answer:

Methods to increase the government revenue from the perspectives of Inland Revenue Department, Customs Department and the Excise Department are given as below:

• Increase custom duty tariff: The revenue of Sri Lanka government can be increased by increasing the custom duty tariff applicable on different commodities currently. By increasing the custom duty tariff on different commodities, the government will be able to collect more custom duty proceeds and thus its revenue will be enhanced dramatically. Increasing the custom duty tariff will also help the government to reduce the huge import of goods from rest of the world and thus protect the domestic manufacturers from getting non-competitive due to dumping of low cost imported goods. In this way, government will be able to enhance the production of domestic companies and thus can enhance the revenue by decreasing the incentives previously provided to such manufacturer for protecting them.

• Increase the excise rate on manufacturing: The revenue of Sri Lanka government can be increased by increasing the excise rate applicable on manufacturing on different commodities currently. By increasing the excise rate on manufacturing of different countries, the government will be able to collect more excise duty proceeds and thus its revenue will be enhanced dramatically. Increasing the excise rate on manufacturing will also help the government to increase the huge import of goods from rest of the world and thus government can enhance the proceed of custom duty. In this way, government will be able to enhance the revenue of the government by increasing the excise rate on manufacturing on different commodities.

• Increase the indirect taxes rate on commodities: The revenue of Sri Lanka government can be increased by increasing the indirect taxes rate applicable on different commodities currently. By increasing the indirect taxes on different commodities, the government will be able to collect more indirect taxes proceeds and thus its revenue will be enhanced dramatically. Thus, it can be said that government will be able to enhance the revenue by increasing the indirect taxes rate applicable on different commodities.

• Bring additional commodities within the purview of excise tax, indirect taxes and custom duty tariff: The revenue of Sri Lanka government can be increased by bringing additional commodities within the purview of excise tax, indirect taxes and custom duty tariff. By increasing the applicability of taxes on additional commodities, the government will be able to collect more custom duty proceeds and thus its revenue will be enhanced dramatically. Thus, it can be said that government will be able to enhance the revenue by bringing additional commodities within the purview of excise tax, indirect taxes and custom duty tariff.

• Decrease the subsidy and incentives provided to marginalised society: The revenue of Sri Lanka government can be increased by decreasing the subsidy and incentives provided currently to marginalised society. By decreasing the subsidy on manufacturing of different commodities, the government will be able to save a lot of internally generated revenue and thus its revenue will be enhanced dramatically. Thus, it can be said that government will be able to enhance the revenue by decreasing the subsidy and incentives provided currently to marginalised society.

• Increase the corporation taxation rate: The revenue of Sri Lanka government can be increased by increasing the corporation taxation and personal taxation rate. By increasing the taxes rate on companies and individuals, the government will be able to collect more direct taxes during a given period and thus its revenue will be enhanced dramatically. Thus, it can be said that government will be able to enhance the revenue by increasing the direct taxes rate applicable on individuals and corporate.


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