Tax revenue up Rs. 331 b in first nine months

• Impressive 35% growth due to new measures and despite sharp contraction of the economy

The tax revenue has seen a 35% growth or by Rs. 331 billion to Rs. 1.28 trillion in the first nine months of this year.

The high growth is due to slew of new taxes and despite the contraction of the economy.

The 35% growth in September year on year is also impressive in comparison to 24.6% improvement by end June.

Non-Tax revenue too has increased to Rs. 165 billion up 66.6% from Rs. 99 billion. As at June, the increase was 63%. Total revenue rose by Rs. 398 billion or 37.8% to Rs. 1.45 trillion in the first nine months of 2022.

Analysts expect the Government’s overall revenue effort in 2022 to be much better, especially with few of the new taxes and levies coming into force from 1 October. On the other hand the economy is forecast to contract by 10% in 2022. GDP contracted by 11.8% in 3Q on the back of 8.4% negative growth in 2Q.

In November the Government revised estimates for 2022 with tax revenue to be Rs. 1.85 trillion and non-tax revenue of Rs. 232 billion bringing the total revenue to Rs. 2.08 trillion.

As per the medium-term fiscal stabilisation program, the Government aims for a revenue goal of 15% of GDP by 2025 from the 8.3% GDP at the end of 2021.

In 2023 the Budget targets a tax revenue of Rs. 3.13 trillion (up by 69%) within a total revenue of Rs. 3.4 trillion (up 63.5%) from 2022.

In 2021 total Government revenue was Rs. 1.4 trillion out of which Tax revenue contributes to Rs. 1.2 trillion. Within Tax revenue, tax collected from direct sources accounted for 23.0% whilst indirect tax sources accounted for 77.0%.  The Government revenue as a percentage of GDP has dropped significantly, since recording its highest figure in the last decade (2011 – 2021) of 13.2% in 2016, to 8.3% in 2021. 

In 2020, Government revenue took a nosedive recording a decline of 27.7% to Rs. 1.36 trillion from Rs. 1.89 trillion with tax earnings also dropping 29.9% to Rs. 1.2 trillion from Rs. 1.7 trillion in 2019.

Government expenditure and net lending in the first nine months rose by 13% or Rs. 315 billion to Rs. 2.69 trillion.

During the nine months ending September 2022, overall budget deficit declined to Rs. 1.24 trillion as against Rs. 1.32 trillion in the corresponding period of 2021.

During the nine months ending September 2022, domestic financing decreased to Rs. 1.3 trillion as against Rs. 1.4 trillion. Foreign financing recorded a net repayment of Rs. 59.1 billion in comparison to Rs. 124.7 billion in the first nine months of 2021.

Outstanding central Government debt increased to Rs. 24.94 trillion by end September 2022 from Rs. 17.58 trillion as at end 2021. By end September 2022, total outstanding domestic debt amounted to Rs. 13.34 trillion while the rupee value of total outstanding foreign debt amounted to Rs. 11.6 trillion.