Customs revenue below target amid import ban on vehicles

Sri Lanka Customs officials have informed a parliamentary committee that they may need help to achieve the revenue target set in the budget due to import restrictions, particularly on vehicles. The issue was discussed during the Parliamentary Committee on Economic and Physical Plans meeting, chaired by MP Mahindananda Aluthgamage, where the Customs Department's contribution to Sri Lanka's economic recovery was examined.

 

 

It was revealed during the discussion that the Customs Department has collected only Rs.330 billion up to May, significantly below the full-year target of Rs.1,226 billion. At the current rate, Customs officials estimate they would only be able to collect Rs.783 billion by the end of the year.

 

 

In response to this shortfall, Committee Chair MP Aluthgamage emphasized the need for the government to make an immediate decision regarding the ban on vehicle imports. Customs officials highlighted that vehicle imports had contributed approximately 20 per cent of state revenue before the import bans were implemented. 

 

 

In 2018, Sri Lanka's highest tax revenue of Rs.923 billion was recorded between 2014 and 2022, with Rs.194 billion coming from taxes on vehicle imports. Customs officials suggested that if the ban on vehicle imports were lifted, Sri Lanka could collect Rs.150 billion in the next six months of the year.

 

 

Import restrictions have been imposed on over 3,200 products in Sri Lanka since April 2022, and the country's foreign exchange reserves have reached near-zero levels. While some import bans have been gradually relaxed due to improvements in the domestic forex situation, lifting the import restrictions on vehicles would be a significant decision. In 2019, Sri Lankans spent over US$800 million on personal vehicle imports; in 2018, the amount was US$1.5 billion.

 

 

As of the end of May, Sri Lanka's official foreign reserves are estimated to be over US$3.5 billion, including a US$1.4 billion swap facility with the People's Bank of China, which has certain conditions regarding its usability.