A review report of the Sri Lanka Central Bank Fiscal Policy Department points to a drop of 35 billion rupees in state revenue anticipated by the 2007 budget proposals.
Tax concessions for imported essential food commodities, duty concessions on imported motor vehicles for public officials, decrease in import of vehicles, and the impact of the free trade agreements are earmarked as the causes behind the drop in state revenue. Revenue from import tax, production duty and VAT have also dropped.
The sharp decline of sale of liquor and cigarettes has also made an impact on state revenue. State has lost 20.96 billion rupees due to the tax concessions provided to essential commodities and motor vehicles, the report said.