Abstract:
Objective –The objective of this study is to analyze the impact of public revenue on
the public expenditure of Sri Lanka between 1990 and 2020.
Methodology –This study utilizes quantitative and secondary data from central
bank publications, making the data more reliable. Tax revenue, non-tax revenue, and
total revenue are independent variables, while public expenditure is the dependent
variable. Descriptive and regression analyses were performed using SPSS software.
Results –Tax revenue is a significant contributor to Sri Lanka's total revenue, while
non-tax revenue makes up a smaller portion. Additionally, the study reveals that Sri
Lanka's total revenue is enough to cover nearly two-thirds of its total expenditure, with
three-quarters of the country's expenses being for recurrent activities. Furthermore,
the statistical analyses reveal that tax revenue has a significant impact on both current
and capital expenditure in Sri Lanka, while non-tax revenue does not.
Research Limitations/Implications – It is also observable that many non-tax
revenue-generating activities in Sri Lanka have been generating significant losses for
a prolonged period. As a result, policymakers must consider discontinuing such long-
term loss-making non-tax revenue activities to promote the country's economy by
increasing tax revenue and gross domestic production.
Novelty/Originality –This study empirically deals with public revenue and
expenditure with the consideration of more than thirty years of period in the Sri
Lankan context.
