Statement

In the first seven months of 2020, the government's tax revenue was reduced by 40.9 percent in comparison with that same period last year.

Fact check

Opposition Leader Sajith Premadasa miscalculates by engaging the wrong base

To evaluate MP Premadasa's claim, FactCheck referred to data available in the weekly economic indicators of the Central Bank of Sri Lanka.

In 2020, the tax revenue for the period January to July amounted to LKR 670.4 billion. For the same period in 2019, tax revenue was LKR 944.4 billion. This is a reduction of 29.0%.

FactCheck attempted to understand the source of the incorrect claim of 40.9%. Exhibit 1 shows that the MP likely made an error in either the calculation or phrasing of his statement. If he phrased his claim as saying that tax revenue in 2019 was 40.9% greater than in 2020 (using the smaller 2020 revenue as the base/denominator), his claim would have been correct. However, the MP's phrasing specifies the reduction of revenue in 2020 against 2019. In this case, the expected calculation would be to use the revenue of 2019 as the base—which only gives a reduction of 29.0%

Therefore, we classify his statement as FALSE.

N.B. To avoid this problem of percentage changes being represented differently depending on the direction of analysis, economists sometimes use the mid-point between two numbers being compared as the base (midpoint formula). Using this formula would give a percentage change of 33.9%—which is still quite far from the claimed 40.9%.

Exhibit 1: Change in tax revenue during January – July from 2019 to 2020 (LKR Billions)