MP Wickramaratne falls short on example of revenue falling short

The government, despite taking the path of revenue-based stabilisation, has fallen significantly short of its targets. For instance, excise revenues have fallen short by approximately 43%, with collection at Rs.125 billion as of September [2023], compared to the required Rs. 214 billion.

Sunday Observer | November 5, 2023

Posted on: 12 January, 2024

Fact Check

In an interview, MP Wickramaratne claims that the government has fallen significantly short of its revenue targets. To illustrate the claim, he cites a 43% shortfall of excise revenue in September 2023, with the actual collection being LKR 125 billion against the budgeted collection of LKR 214 billion.

To verify this claim, FactCheck.lk consulted the Fiscal Management Report for 2024 and the Budget Speeches 2023 and 2024.

In the 2024 Budget Speech, released in November 2023, there was a downward revision in the anticipated revenue for 2023 of 16% from the initial revenue estimate of LKR 3,415 billion budgeted for the year. Therefore, the MP’s overall argument that revenue “has fallen significantly short of its target” is correct.

However, the example cited is incorrect on two counts. The MP illustrates his claim with an example of the shortfall in excise tax collection. First, the figures cited closely align with excise taxes for only liquor and not total excise taxes (see Exhibit 1). Second, even as an example of revenue shortfall in liquor excise tax collection, the 43% reduction seems to have been calculated by comparing a nine-month collection (LKR 124 billion) in 2023 against an annual estimate (LKR 214 billion). The shortfall for nine months can be estimated at 23% (see additional note).

To summarise, the MP is correct in his overall claim that the government revenue has fallen significantly short of its target. However, his example is incorrect as (a) he evaluates the reduction in liquor excise tax collection, not all excise collection, and (b) he does so by comparing nine months of collection against the annual collection estimate.

Therefore, we classify the MP’s claim as PARTLY TRUE.

Additional note: If the monthly average of excise taxes on liquor collected for the first nine months continues for the remainder of the year, the total revenue will reach approximately LKR 165 billion, resulting in a shortfall of about 23%, not 43%.

*FactCheck.lk’s verdict is based on the most recent information that is publicly accessible. As with every fact check, if new information becomes available, FactCheck.lk will revisit the assessment.

Exhibit 1: Calculation of excise taxes (LKR billion)

Source: Fiscal Management Report 2024