Question:
The significant increase in government tax revenue in Sri Lanka after 2022 was primarily driven by:
(1) a reduction in government expenditure.
(2) an increase in the VAT rate and the reintroduction of PAYE tax.
(3) a surge in profits of state-owned enterprises.
(4) higher revenue from import duties due to increased imports.
(5) foreign aid grants.
Correct Answer:
(2)
Answer Explanation:
The post-crisis fiscal consolidation efforts focused on revenue mobilization, specifically raising the VAT rate (from 8% to 15% and then 18%) and widening the income tax net (APIT/PAYE).
Topic: Sri Lankan Economy Year: 2024
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