Vehicle import tax revenue declined by 47.1% in first eight months of 2020

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Revenue from Excise duty increased significantly by 11.6% to Rs. 105.6 billion in the first three months of 2020, compared to Rs. 94.6 billion recorded in the same period of 2019 with the increased revenue from all categories applicable to excise duty other than motor vehicles, Fiscal Management Report 2020–21 outlined.

However, reflecting the impacts of the COVID-19 pandemic, the revenue declined significantly by 44.9% to Rs.54.5 billion in the second quarter of 2020 and recovered in the months of August with the new normal situation in the country. Revenue from Excise duties continued to be the leading contributor for the government tax revenue, accounting for 26.8% of the total tax revenue from January to August with a 60.5% achievement against the annual estimate of 2020.

Revenue from excise duty on cigarettes increased slightly by 1.1% to Rs.58.9 billion during the first eight months of 2020, compared to Rs.58.3 billion in the same period of 2019 despite the drop in cigarette sales during the period of 2020. However, an upward revision of Excise duty on cigarettes has a positive impact on this revenue performance partially outweighing the effect of sales drop.

Revenue generation from Excise duty on the importation of motor vehicles declined notably by 47.1% to Rs.43.1 billion in the first eight months of 2020, compared to Rs.81.5 billion recorded in the same period of 2019. This subdued performance was mainly due to the sharp decline in motor vehicle imports in the first eight months of 2020 due to the restriction imposed on the importation of motor vehicles effective from March 2020. In addition, an upward revision of Excise duty on motor vehicles in line with the budget 2019 has a negative impact on the importation of motor vehicles.

The decline in revenue from liquor observed in the months of March to May was revered in the months of June to July showing the recovery of its growth momentum. This recovery has resulted to decline in revenue marginally by 4.1% to Rs.72.5 billion during the first eight months of 2020 from Rs.75.6 billion in the same period of 2019 mainly due to the decline in liquor production and liquor sales during the COVID-19 pandemic period.

Excise revenue from hard liquor declined by 6.0% to Rs.51.3 billion in the first eight months of 2020, compared to Rs.54.6 billion in the same period of 2019. In the same vein, revenue collection from malt liquor dropped by 16.2 percent to Rs.18.1 billion in the first eight months of 2020, compared to Rs.21.6 billion in the same period of 2019.

Revenue from petroleum products increased significantly by 29.3% to Rs.18.3 billion from January to March 2020, compared to Rs.14.1 billion in the same period of 2019, showing the signs of economic recovery with the increase in consumption of petroleum products.

However, this progressive performance declined notably by 52.0% to Rs.7.4 billion in the months of April – June 2020 and recovered in July – August 2020 recording a growth of 4.4 percent to Rs.11.6 billion.

Meanwhile, revenue from Excise duty on other products declined moderately by 14.8% to Rs.2.8 billion in the first eight months of 2020, compared to Rs.3.3 billion in the same period of 2019.

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