Sri Lanka government workers eat up new tax revenues

July 31, 2007 (LBO) – Sri Lanka’s bloated public sector has consumed a bulk of the additional tax collections in the first five months of the year, with the salary bill rising 30 percent, data released by the finance ministry shows. During the last three years the treasury and revenue authorities have tightened loopholes and strengthened tax administration significantly.

Last year 54 cents out of every tax rupees collected by the government was eaten up by public sector wages and pensions.

Racing Ahead

In the first five months of 2007 this proportion had now increased to 57.7 percent with salaries and pensions racing ahead to account for almost all of the current expenditure increases.

Up to May 2007, total current expenditure grew by 25.0 billion rupees with salaries and pensions alone consuming 23.8 billion rupees, the half yearly report released under Sri Lanka’s fiscal management law said.

Current expenditure grew to 247.6 billion rupees from 222.6 billion with salaries and pensions taking up 112.6 billion and interest costs the second largest item taking up 71.3 billion rupees.

Payments under the Samurdhi welfare scheme to the poor remained flat at 3.8 billion rupees and fertilizer subsidies