The Island
The UPFA granted the public sector duty concessions in excess of Rs. 10 billion in 2008 though the government had experienced severe economic difficulties due to global financial crisis, escalating defence costs and unprecedented oil bill.
The move to appease the public sector had caused a revenue loss more than double the losses incurred by the government due to illegal refunds of VAT (Value Added Tax) during the previous UNP-led UNP administration.
The Auditor General S. Swarnajothi, in his 2007 annual report to Parliament, said that the VAT fraud previously estimated to have cost the government Rs. 3.5 billion, in fact caused a staggering Rs. 4.07 billion loss.
According to 2008 annual performance report submitted to Parliament recently by the Department of Fiscal Policy of the General Treasury, the government had suffered a revenue loss of over Rs. 4 billion due to the decline in cigarette sales as well as liquor production.
The report also revealed that duty concessions granted to public servants to import a range of vehicles caused revenue loss in excess of Rs. 10 billion.
The Treasury said that a 19 per cent drop in the import of motor vehicles, too, caused ‘a variation in the exercise duty category.
In keeping with a concessionary duty structure introduced for the benefit of the public sector, almost 9,000 vehicles had been imported in 2008.
The Treasury said that revenue performance fell far short of targets envisaged in last year’s budget, primarily due to duty concessions on the import of essential commodities to curb rising food prices.
The Treasury revealed that as part of the overall measures taken to enhance revenue collection mechanism, a CESS imposed on both petrol and diesel imports had generated Rs 800 million.