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Lead to underfunding education, other key public services: HRW

Published

5 months ago

2025/10/16

Sri Lanka: Ruinous tax policies stoke inequality

Sri Lanka’s tax policies played a driving role in the country’s devastating 2022 economic crisis and have contributed to the chronic underfunding of education and other public services, Human Rights Watch has said in a report released on Oct. 15. The government of President Anura Kumara Dissanayake should urgently adopt measures to uphold its human rights obligations and enact reforms to a system that presently favors companies and wealthy people while failing to deliver adequate revenues.

The 101-page report, “Tax Giveaways, Struggling Schools: How Low Taxes Drove Sri Lanka’s Economic Crisis and Squandered its Education Lead,” describes how Sri Lanka’s successive governments have adopted policies that resulted in inadequate revenues, contributing not only to Sri Lanka defaulting on its debt but also to a decades-long decline in public education spending as a share of Gross Domestic Product (GDP) to among the lowest in the world. It also documents the impacts of inadequate funding on children’s right to education. Moreover, low corporate and personal tax revenues have led to an average of 80 percent of taxes coming from goods and services, which generally are regressive because they claim a higher share of poorer people’s income.

“For decades, Sri Lanka has been hostage to economic policies that starve its government of revenue and reflect a myopic focus on GDP growth,” said Sarah Saadoun, senior economic justice researcher at Human Rights Watch. “In practice, that means education spending has fallen well behind the pace of growth, turning the country from a global leader in public education to a laggard.”

Human Rights Watch interviewed over 70 people, including those affected by the economic situation and familiar with the public education system, as well as a wide spectrum of prominent Sri Lankan economic experts. Human Rights Watch also conducted a comprehensive analysis of relevant data and research relevant to Sri Lanka’s tax policies and education spending.

These policy failures have infringed upon children’s right to education, Human Rights Watch found. Sri Lanka’s education spending dropped from between 3 to 5 percent of GDP in the two decades following independence, a time when the country was an education champion among postcolonial countries, to 1.5 percent of GDP in 2022, among the lowest in the world.

Low tax revenues also contributed to Sri Lanka defaulting on its debt in April 2022, which precipitated an economic crisis including widespread job and income loss alongside a sharp rise in the cost of living that remains devastating for human rights.

While former President Gotabaya Rajapaksa introduced sweeping tax cuts in 2019 that dealt a devastating blow to revenues, Human Rights Watch found that the problem began in the late 1970s, when Sri Lanka began an economic shift common at that time that deprioritized social spending and liberalised trade. The resulting sharp decline in tax revenue from trade and other sources was not replaced by a progressive tax system that appropriately benefited from the ensuing growth.

In particular, the government began regularly granting companies broad tax exemptions through an opaque body highly vulnerable to abuse. In 2022, the cost of tax exemptions reached a staggering amount equivalent to 56 percent of revenues, or nearly three times the education budget. The government also collects only a small amount of taxes from personal income and assets and has not ensured that tax agencies have the capacity and accountability needed for tax enforcement.

The report’s focus on education illustrates a broader deprioritization of social spending, but the squandered potential is particularly salient in education, an area in which Sri Lanka was once widely regarded as a global leader. Sri Lanka was among the first countries to establish free primary and secondary education for most people.

Human Rights Watch found that low spending has led to schools charging fees to cover the cost of basic resources, posing significant hardship to many families. Inadequate public funds have also led to a vast disparity in resources based on students’ socioeconomic status. Low corporate and personal income tax revenues have led the government to heavily rely on taxes and goods and services—called “indirect taxes”—such as value-added tax (VAT) that weigh more heavily on poorer people.

In March 2023, the International Monetary Fund (IMF) approved a $3 billion bailout to Sri Lanka and creditors restructured the country’s debt, although its debt servicing obligations remain very high. In 2024, the government paid 57 percent of its revenue to creditors. In January 2025, President Dissanayake’s National People’s Power (NPP) party took office following a campaign that promised sweeping economic reforms, including reducing regressive taxes and improving education.

The government should consider eliminating corporate tax exemptions given their high cost, questionable effectiveness, and vulnerability to abuse, Human Rights Watch said. The government should also adopt other progressive tax measures, such as a wealth tax.

The case of Sri Lanka reflects the challenges many governments face under the current international tax system. For example, tax competition pressures governments into offering tax incentives that fuel a race to the bottom, depriving many governments of the necessary revenue to fulfill human rights. These challenges highlight the importance of ongoing negotiations for a United Nations tax treaty to build international rules informed by human rights imperatives and increased cooperation that would enable governments to end this negative spiral.

Under international human rights law, states are obligated to take steps to the “maximum of their available resources” to progressively realize the rights to health, education, social security, and an adequate standard of living, among other economic, social, and cultural rights. States are obliged not only to act individually, but also through international assistance and cooperation. This necessarily implicates states’ fiscal practices and tax policies domestically and in international fora.

Sri Lanka’s new government has taken some positive steps, such as providing an LKR 6,000 (about $20) bursary to some families to help with education-related costs, but it has only marginally raised the education budget. It should continue to increase the education budget, with a goal of reaching the internationally agreed benchmark of 4 to 6 percent of GDP allocated to education, Human Rights Watch said. The government of President Dissanayake should also urgently adopt measures to uphold its human rights obligations and enact reforms to a system that currently favors companies and wealthy people while failing to deliver adequate revenues.

“Sri Lanka’s economic quagmire makes clear that growth alone is not enough to fulfill human rights,” Saadoun said. “The government should finally establish a progressive tax system and use its income so that it adequately funds education and other public services that benefit all Sri Lankans.”

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Renewed Lanka’s Easter Bombing probe puts NTJ’s South India radicalisation network back under lens

Published

2 hours ago

2026/03/1

Thilina Walpola

New Delhi (IANS):The arrest of Sri Lanka’s former Intelligence chief, Retired Major-General Suresh Sallay is a turning point in the investigations into the 2019 Easter Sunday bombings that killed 279 people.

The move was a bold one taken by President Anura Kumara Dissanayake who won the presidency in 2024.

He had promised that all persons involved in the attack would be brought to justice.

Sallay was made State Intelligence Service (SIS) chief in 2019 after Gotabaya Rajapaksa became President.

The allegation against Sallay was that he had permitted the attack to take place with the intention of influencing that year’s presidential election, which was eventually won by Rajapaksa.

Sallay had become a prominent figure in Sri Lanka and was widely credited with dismantling the LTTE. His arrest has led to a political storm and many state that it could revive tensions relating to the LTTE.

Ali Sabry, former Sri Lankan Minister for Foreign Affairs said that the developments are deeply troubling.

An Indian official said that the developments in Sri Lanka are being monitored closely.

On the question whether the LTTE issue would come back into the picture following the arrest of Sallay, the officer said that attempts are being made, but it would be very tough.

There have been several cases that the National Investigation Agency (NIA) has been probing concerning the revival of the LTTE.

The ISI, too, has tried its hand in ensuring the revival of the LTTE, but has not been successful so far.

To prevent the revival of the LTTE, both India and Sri Lanka have been working very closely.

Another official explained that the current ties with Sri Lanka have gone from ideological to an investment-led partnership.

Prime Minister Narendra Modi and President Dissanayake share a pragmatic relationship and this has gone a long way in ensuring cooperation on all fields including security, the official explained.

While some in Sri Lanka do not subscribe to Dissanayake’s decision on Sallay, the fact is that the Easter Bombing case has to be probed from every possible angle.

An Intelligence Bureau official says that a major concern today are the activities of the National Thowheeth Jama’ath (NTJ) and Jamathei Millathu Ibrahim (JMI), the two outfits responsible for this attack.

The NTJ in particular has a vast presence in South India and has managed to radicalise a large number of youth in Tamil Nadu and Kerala.

The mastermind of the attack, Mohammad Zahran Hashim was a frequent visitor to Tamil Nadu. He was also responsible for the radicalisation of Jamesha Mubeen who carried out an unsuccessful attempt to bomb a temple in Coimbatore in 2022.

The Indian agencies have been actively pursuing the role played by Hashim. A probe by the NIA in the South India radicalisation case revealed that the entire plot was being run by Hashim from Sri Lanka.

At least 50 of the 100 radicalisation videos seized by the agency were discourses by Hashim, who had close links with the Islamic State.

Officials say that Sallay could provide details to investigators about the module that Hashim ran.

This would come in handy for the Indian agencies who are probing cases directly linked to the NTJ in South India.

Hashim, who was the ring leader for the suicide bombers during the Easter Bombing had spent a considerable amount of time in India.

The Indian agencies would want to learn if any of the locals that Hashim interacted with had any idea about the Easter Bombings.

While in India, Hashim had focussed his radicalisation programmes mainly at Mallapuram, Coimbatore, Nagapattinam, Kanyakumari, Ramnathpuram, Vellore, Trichy and Thirunelveli, the NIA probe found.

Pallay has for now denied any links to the Easter Bombings.

Indian officials say that they do not want to comment on Pallay and his alleged links.However, it is important that the bombings are probed thoroughly since the activities of the NTJ have a direct bearing on India, particularly the southern states, the official also added.

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Sajith warns: Don’t let trade union action stall cyclone relief

Published

2 hours ago

2026/03/1

Thilina Walpola

Sajith Premadasa

Opposition and SJB Leader Sajith Premadasa on Friday stressed that relief efforts for communities affected by Cyclone Ditwah must not be derailed by internal disputes, as several trade unions announced plans to withdraw from disaster relief duties.

Taking to ‘X’, Premadasa called on the Government to prioritise coordination and ensure uninterrupted assistance to families still awaiting aid.

“The Government must work closely with officers on the ground to ensure coordination and uninterrupted support. When families are still waiting, how can we allow for this confusion?” he questioned, emphasising that relief measures should not be delayed under any circumstances.

His remarks follow the decision by several trade unions representing Government officers engaged in disaster relief operations to launch trade union action beginning from Friday (27 February).

The unions announced their withdrawal from relief-related duties, citing unresolved issues affecting officers involved in post-disaster operations.

According to the unions, more than 93 days have elapsed since the widespread destruction caused by Cyclone Ditwah. During this period, disaster relief officers and Grama Niladharis have worked continuously, day and night, acting as key coordinators between the Government and affected communities. However, they claim that authorities have failed to adequately address longstanding concerns relating to officers engaged in relief work.

Meanwhile, Secretary to the President Nandika Sanath Kumanayake yesterday underscored the need to expedite relief and recovery initiatives.

Chairing a progress review meeting of the National Council for Disaster Management, he called for strengthened coordination among State institutions responsible for disaster response, noting that effective inter-agency collaboration is critical to delivering timely assistance to affected communities.

Efforts to accelerate recovery and maintain continuity in relief operations are ongoing.

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Complaints filed with CID, Bribery Commission over alleged substandard coal deal

Published

2 hours ago

2026/03/1

Thilina Walpola

Allegations surrounding the importation of substandard coal intensified yesterday, with civil society representatives and Opposition MPs lodging complaints with the CID and the Commission to Investigate Allegations of Bribery or Corruption, calling for comprehensive investigations into the procurement process and alleged financial losses to the State.

A group of civil organisation representatives submitted a complaint to the CID on Friday (27 February), requesting a probe into what they described as irregularities in the coal procurement process and the resulting loss to the country.

Addressing the media, Ananda Palitha, Convenor of the Samagi Joint Trade Union Alliance affiliated with the SJB, alleged that tender procedures had not been followed properly and claimed that emergency purchases had facilitated corruption.

“The tenders are not called on time. The same company that was previously blacklisted after attempting to bring in substandard rice is now

being awarded the coal tender. They have been given time until July to get registered. The corruption is already confirmed. It is very clear with these emergency purchases,” he charged.

Palitha also expressed confidence that the current President would not interfere with investigations into the coal imports, drawing a comparison to the legal action instituted against former Minister Keheliya Rambukwella over the substandard medicine import controversy during the previous administration.

Meanwhile, a group of SJB parliamentarians filed a separate complaint with the Bribery Commission on Thursday (26 February) over the same issue. MPs Mujibur Rahman, Chaminda Wijesiri, Sujith Sanjaya Perera and Kavinda Jayawardena met Commission officials to formally submit their complaint.

Speaking to the media afterwards, MP Mujibur Rahman alleged that the company concerned had violated two key contractual conditions — by supplying substandard coal and by failing to deliver shipments within the stipulated timeframe.

He contended that either of these violations would be sufficient grounds to cancel the agreement, but claimed the Government was attempting to justify the transaction by asserting that no fraud had occurred.

“By now it has been revealed that this transaction is corrupt,” he said, adding that the Bribery Commission, which had previously conducted extensive investigations into allegations against the former Government, should similarly take action to recover what he claimed was Rs. 7,000 million in public funds lost due to the deal.Investigations into the matter are ongoing.