foreign credit line to facilitate vehicle imports proposed

Revenue shortfall Rs 443 bn:

By Shamindra Ferdinando

Sri Lanka Customs has warned the Finance Ministry that it will fall short of its revenue targets for 2023 by at least Rs. 443 bn unless the government abolishes the ban on vehicle imports as well as restrictions on other imports immediately.

The top Customs management recently told the Sectoral Oversight Committee (SOC) on National Economic and Physical Plans that the Finance Ministry had been appraised of their inability to meet anticipated revenue targets.

The Customs officials appeared before the SOC, headed by SLPP lawmaker Mahindananda Aluthgamage, on 08 June.

Aluthgamage said that only Rs 330 bn had been collected up to May this year though the government projected Rs 1,226 bn in revenue.

Sri Lanka imposed a ban on vehicle imports in early 2020 due to a severe balance of payments crisis that ultimately led to declaration of bankruptcy in April 2022.

The SOC has summoned Customs to ascertain their contribution to the government revenue this year.

The SOC has been told that the maximum Customs could collect this year is Rs 783 bn under the present circumstances.

The all-party committee has also been informed that approximately 20 percent of Customs revenue was earned through taxes imposed on vehicle imports. Therefore, the vital unit couldn’t be expected to succeed unless the government created the much needed requirement.

Customs, Inland Revenue and Excise Departments account for more than 90 % of government revenue.

Customs also pointed out that since 2014 they never collected revenue more than Rs 1,000 bn. During the 2014-2022 period, 2014 had been the best year with Customs revenue collection reaching Rs 923 bn mark at the time the late Mangala Samaraweera served as the Finance Minister. Of this amount, Rs 194 bn had been collected as taxes imposed on vehicle imports, the arliament said. The statement issued by Parliament quoted Customs as having said that Rs 150 bn could be collected by the end of this year if ban on vehicle imports was done away with immediately.

Customs expressed the view that by resumption of vehicle imports immediately in line with their overall proposals, revenue collection for this year could be increased to Rs 1,100 bn from projected Rs 783 bn.

However, SOC and Customs seemed to have agreed that whatever the changes brought in the original estimate of Rs 1,226 couldn’t be met.

SOC Chairman Aluthgamage has assured that discussions were underway and the government would take a decision in this regard soon.

During the proceedings, it was revealed that as a result of issuance of a particular gazette in 2012 any quantity of gems could be imported by just paying USD 200. Customs have requested SOC to restore the system that had been in operation before to permit imposition of duty on the basis of the estimated value.

They also discussed the need to address Customs-related court cases within a specified time. Former minister Aluthgamage said that he would take up this issue with Justice Minister Dr. Wijeyadasa Rajapakse, PC. Customs also revealed that there were approximately 1,200 held by them pending court cases.

SOC also listened to the shocking revelation that approximately 60% percent of imports weren’t subjected to Customs inspections at all. Declaring that sugar, fertiliser and rice that were brought through the green channel never  subjected to Customs scrutiny, SOC was told cigarettes, liquor and other items were smuggled in with above mentioned items.

MP Aluthgamage has pointed out that major fraudulent activities took place as Customs officers, based at Bandaranaike International Airport, were not subjected to checks at all. Customs have assured SOC Chairman after having studied the situation a directive would be issued to pave the way for BIA-based Customs officers to be checked.