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Property tax: a new tax Sri Lanka is going to be introduced in 2027

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Image courtesy City National Bank

Expanded budget deficits and continuous borrowing by successive governments pushed the Sri Lankan economy into a recession. These heavy borrowings placed a significant burden on the shoulders of today’s citizens. The previous government was compelled to seek assistance from the IMF to revive the economy, which led to increased tax rates, a broader tax base, and the introduction of new taxes. The present NPP government has introduced some tax revisions. However, it too must increase revenue in order to address the economic crisis and promote sustainable growth. This is why the country is going to introduce property tax in 2027. In other words, the government’s tax demand increases in the near future. This note is to provide a brief introduction on property tax that we will have to pay.

Property tax

Governments may impose various types of taxes, though some countries choose not to levy certain kinds. Property tax is no exception. After considering the taxation of income and expenditure, many countries also tax stocks of wealth. Such taxes may be imposed on individual pieces of property—payable by the owner and classified as impersonal in rem taxes (those imposed on objects or activities)—or on the total property holdings or net worth of a person, making them personal taxes.

When we hear the word property, the related concept of wealth also comes to mind. However, there is a distinction between property tax and wealth tax. Property tax generally applies to real property, while wealth tax is levied on total net wealth (all assets minus liabilities). Some countries, such as Spain, Switzerland, Norway, and France, impose both taxes simultaneously. Property tax, however, is widespread globally, though it remains relatively novel in Sri Lanka. Property tax is generally divided into two categories: real property taxes and personal property taxes, both of which are often referred to as ad valorem taxes (taxes based on the value of property).

Real property (realty) is defined as land and whatever is erected or growing on the land or permanently affixed to it. It also includes subsurface features such as mineral deposits. Real property taxes are levied on the ownership of land and buildings, with the tax base being the property’s monetary value. Because real estate cannot be moved or hidden, and its ownership is a matter of public record, it provides governments with a highly reliable tax base. These taxes are typically assessed annually, based on market value as determined by local authorities. Elected or appointed officials are responsible for valuing the property and notifying owners of the assessed amount. A distinctive feature of real property taxes is that the tax rate is set each year according to the jurisdiction’s revenue needs for that budget cycle.

Personal property, in contrast, refers to any asset that is not real property. Like real estate, personal property is taxed based on its value, but unlike real property, its value is usually not assessed by government officials. Instead, individuals and businesses must determine the value of their taxable assets and report it to the tax assessor. Taxable personal property generally falls into three categories: household tangibles, business tangibles, and intangibles. Household tangibles commonly taxed include automobiles, recreational vehicles, pleasure boats, and private aircraft. Business tangibles include inventory, furniture, fixtures, machinery, and equipment. Intangible assets most often subject to tax are marketable securities such as stocks and bonds.

Determination of tax rate

An individual’s property tax liability is calculated as the product of the tax rate and the property’s assessed value—the value assigned by the local authority. In most cases, jurisdictions (local authorities) attempt to align assessed values with market values. However, if a property has not been sold recently, its market value may be unknown, requiring the tax authority to estimate based on the market values of comparable properties. The degree of divergence between market and assessed values depends on the accuracy of the estimating process.

Empirical evidence shows that many jurisdictions perform poorly in assessing property values, leading to situations where properties subject to the same statutory tax rate face vastly different effective tax rates. In the United States, for example, thousands of jurisdictions operate their property tax systems independently. None include a comprehensive measure of wealth in their tax base, and there are significant differences in what types of property are excluded and what tax rates are applied.

Some communities grant preferential treatment to new business facilities to encourage investment, while few tax personal wealth beyond homes. Assets such as cars, jewelry, and financial securities are usually exempt. Generally, structures and the land on which they are built form the core of the property tax base, though effective rates vary widely across jurisdictions.

For businesses, calculating property taxes can appear complex, but with the right tools and a sound understanding of the fundamentals, the process becomes more manageable. The cornerstone is determining the assessed value, typically carried out by a government assessor who evaluates factors such as land, buildings, and improvements. Equally important is establishing the tax rate, commonly referred to as the mill rate. The mill rate represents the amount of tax owed per Rs.1,000 of assessed property value and is determined annually by local authorities in line with revenue requirements.

Reasons to pay

There are several theoretical bases for imposing taxes. One rationale for wealth taxation is the benefit principle: public services, such as road modernisation, increase the value of real property and should therefore be financed by property owners. This argument can be traced back to seventeenth-century natural-law theorists, who viewed one of the state’s primary functions as the protection of property. From this perspective, property owners are obliged to contribute toward the state’s expenses. Logically, such reasoning supports a comprehensive tax base that includes all forms of property—both tangible and intangible.

Property tax can also be understood as a user fee, since communities rely on it to finance essential public services such as education, healthcare, and policing. In this sense, the tax is not merely a levy but the cost of accessing and maintaining vital services that benefit society as a whole. Beyond theory, Sri Lanka faces practical imperatives for broadening its tax base and strengthening its fiscal framework. Expanding property taxation could play a critical role in addressing the country’s debt crisis while fostering long-term economic growth and development.

Impact, incidence and effects of the tax

The impact of a tax refers to its first point of contact with taxpayers—that is, the person who initially pays it. In the case of property tax, the legal liability usually falls on the property owner. Local governments assess the value of land and improvements, and the owner must pay tax based on this assessment. Thus, the immediate burden is borne by the property holder, whether an individual, household, or business. Because property taxes influence both investment and location decisions, most European countries allow businesses to deduct them: of the 27 that levy property taxes, 23 permit deductions from corporate income, thereby reducing the effective burden and encouraging investment.

The incidence of a tax, however, concerns who ultimately bears the economic burden after adjustments in behavior, prices, and markets. Although property owners are legally responsible, the real incidence may shift. Landlords may raise rents to pass part of the burden to tenants, while businesses may shift costs forward to consumers through higher prices or backward to workers through lower wages.

The question of who ultimately bears the burden of the property tax has long been debated. Three main perspectives can be identified: the traditional view, the capital tax view, and the excise-on-capital view. Under the first, property tax is seen as an excise tax on land and structures.

Since the supply of land is fixed, landowners cannot escape the tax and thus bear the full burden. In many cases, the tax becomes capitalized into land values: prospective buyers discount the purchase price to account for future tax liabilities. As a result, landowners effectively bear the tax indefinitely. Capital tax view holds that if property tax is treated as a uniform tax on all capital, then the entire burden falls on capital owners.

Since capital income is concentrated among higher-income households, property tax in this view is progressive, contradicting the traditional view. According to final view property tax rates, in practice, vary by jurisdiction and property type, meaning it functions as a set of excise taxes on capital. Capital tends to migrate from high-tax to low-tax areas until after-tax returns equalize. This reallocation affects returns to other factors of production depending on their mobility. Land, being immobile, cannot escape the tax, while less mobile forms of capital are more likely to bear the burden. Over the long run, even the overall supply of capital may respond to property tax rates.

Property taxes have a range of economic and social effects. Firstly property taxes provide a stable and predictable source of income for local governments, often funding essential services such as education, infrastructure, and public safety. Secondly, when designed well, property taxes can contribute to equity by taxing wealth more directly than income or consumption taxes. However, poorly assessed property taxes can be regressive, disproportionately affecting those with lower incomes relative to property value. Thirdly, property taxes on land are often considered efficient since land is immobile and cannot be hidden, making it a strong tax base.

Taxes on improvements (buildings) can, however, discourage investment in property development or maintenance. Fourthly, high property taxes may influence housing decisions, business location choices, or patterns of land use. Preferential rates or exemptions can also create distortions, such as attracting businesses or encouraging certain types of development. Fifthly, because property taxes are highly visible and often unpopular, they can provoke resistance from taxpayers, influencing local politics and policymaking.

Sixthly, as a tax on real estate, property taxation can distort economic choices. It may encourage substitution away from real property toward other inputs, or toward consumer durables in states where personal property is taxed less heavily. This can discourage housing production and consumption. Finally, property taxes may also affect location decisions. Since rates vary across communities, industries that rely heavily on real estate tend to locate in lower-tax areas. At the same time, businesses also weigh the public services financed by local property taxes when deciding where to operate.

Empirical evidence further illustrates these dynamics. In 2011, China introduced property taxes in Shanghai and Chongqing, targeting second homes and high-end properties. A 2021 study found little effect on housing prices, mainly due to the narrow tax base, low rate, and generous exemptions. By contrast, a German study (March 2021) found that higher property taxes were fully passed on to rental prices within three years, though the pass-through was weaker when housing supply was inelastic. More broadly, property taxes tend to be capitalized into purchase prices, lowering what buyers are willing to pay, while in rental markets, part of the burden may also be shifted to tenants.

Decisions to be made

Sri Lanka is expected to introduce a property tax in 2027. However, several key decisions must be made before implementation. First, which level of government will be responsible for imposing the tax? In many countries, property tax is administered by local authorities. In Sri Lanka, it must be decided which layer of government will have the authority to levy and collect the tax.

Second, the scope and rate of taxation must be determined. Property can take many forms, but for real property, land and buildings are the main categories. If buildings are included, should the tax apply to all types—including residential houses? Since houses vary greatly in size, facilities, and value, questions arise as to whether very small houses should be taxed. In some countries, only second or additional properties are taxed. With respect to land, it must be decided whether all types of land will be taxed. For example, paddy land presents a special case, as profit margins in paddy farming are often extremely low, or even negative. This calls for certain exemptions, deductions, or abatements. Common exemptions internationally include those for non-profit organizations, historical properties, or primary residences (homesteads).

Third, the treatment of depreciation and improvements must be clarified. Property assessors typically evaluate factors such as age, condition, and maintenance in determining depreciation, as well as any improvements or renovations that increase value. Since different assessors may apply varying standards, this can result in inconsistencies in assessed values.

Why is the property tax so unpopular?

Several explanations have been offered. Because housing transactions occur infrequently, property tax assessments are based on estimated values. If these valuations are inaccurate or biased, the tax is seen as unfair. The tax is also highly visible: unlike income and payroll taxes, which are withheld from wages and remitted by employers, property taxes are typically paid directly by homeowners, often in large quarterly or annual installments. These lump-sum payments can feel like a financial shock. Some property owners, particularly the elderly, do not have enough cash to make property tax payments and may therefore be forced to sell their homes. A high property tax rate also affects property values. Other things equal, a heavily taxed property will sell for less. This means that while current owners may feel burdened, new buyers are not necessarily worse off once the lower purchase price is taken into account.

One ambitious reform would be to replace the property tax with a personal net worth tax. This tax would be levied on the difference between the market value of all a taxpayer’s assets and liabilities. Unlike the property tax, such a system reflects a truer measure of ability to pay, since debts can be deducted. It would also allow for exemptions and progressive rates. However, because people often hold assets and debts across multiple jurisdictions, a net worth tax would need to be administered at the federal level.

Conclusion

Alongside the need to address technical and political barriers to reform, the construction of more effective property tax systems also depends on improving levels of tax compliance. A key foundation of compliance is the presence of credible and fair enforcement: few taxpayers will willingly comply if they believe there are no consequences for evasion or if they suspect their neighbours are not paying their fair share.

It is well known that taxes are unpopular. However, Sri Lanka needs to broaden its revenue base and is preparing to introduce a new tax in the near future. In the past, widespread corruption undermined public trust, and many citizens paid taxes reluctantly, while some were able to evade them altogether. Today, with corruption more effectively controlled and public confidence in government improving, the conditions are more favourable for introducing a property tax. Still, such a measure must be implemented carefully to maintain public support and fairness.

Importantly, property taxes are widely considered the least harmful form of taxation, as they have the smallest negative impact on household and business economic decisions compared to most alternatives. For example, in 2010 the OECD ranked tax instruments by efficiency, from most to least: property taxes, value-added tax (VAT), personal income tax, and corporate income tax.

by Dr. Tikiri Nimal Herath✍️
Emeritus Professor
tikiriherath@gmail.com



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Reconciliation: Grand Hopes or Simple Steps

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In politics, there is the grand language and the simple words. As they say in North America, you don’t need a $20-word or $50-word where a simple $5-world will do. There is also the formal and the functional. People of different categories can functionally get along without always needing formal arrangements involving constitutional structures and rights declarations. The latter are necessary and needed to protect the weak from the bullies, especially from the bullying instruments of the state, or for protecting a small country from a Trump state. In the society at large, people can get along in their daily lives in spite of differences between them, provided they are left alone without busybody interferences.

There have been too many busybody interferences in Sri Lanka in all the years after independence, so much so they exploded into violence that took a toll on everyone for as many as many as 26 (1983-2009) years. The fight was over grand language matters – selective claims of history, sovereignty assertions and self-determination counters, and territorial litigations – you name it. The lives of ordinary people, even those living in their isolated corners and communicating in the simple words of life, were turned upside down. Ironically in their name and as often in the name of ‘future generations yet unborn’ – to recall the old political rhetoric always in full flight. The current American anti-abortionists would have loved this deference to unborn babies.

At the end of it all came the call for Reconciliation. The term and concept are a direct outcome of South Africa’s post-apartheid experience. Quite laudably, the concept of reconciliation is based on choosing restorative justice as opposed to retributive justice, forgiveness over prosecution and reparation over retaliation. The concept was soon turned into a remedial toolkit for societies and polities emerging from autocracies and/or civil wars. Even though, South Africa’s apartheid and post-apartheid experiences are quite unique and quite different from experiences elsewhere, there was also the common sharing among them of both the colonial and postcolonial experiences.

The experience of facilitating and implementing reconciliation, however, has not been wholly positive or encouraging. The results have been mixed even in South Africa, even though it is difficult to imagine a different path South Africa could have taken to launch its post-apartheid era. There is no resounding success elsewhere, mostly instances of non-starters and stallers. There are also signs of acknowledgement among activists and academics that the project of reconciliation has more roadblocks to overcome than springboards for taking off.

Ultimately, if state power is not fully behind it the reconciliation project is not likely to take off, let alone succeed. The irony is that it is the abuse of state power that created the necessity for reconciliation in the first place. Now, the full blessing and weight of state power is needed to deliver reconciliation.

Sri Lanka’s Reconciliation Journey

After the end of the war in 2009, Sri Lanka was an obvious candidate for reconciliation by every objective measure or metric. This was so for most of the external actors, but there were differences in the extent of support and in their relationship with the Sri Lankan government. The Rajapaksa government that saw the end of the war was clearly more reluctant than enthusiastic about embarking on the reconciliation journey. But they could not totally disavow it because of external pressure. The Tamil political leadership spurred on by expatriate Tamils was insistent on maximalist claims as part of reconciliation, with a not too subtle tone of retribution rather than restoration.

As for the people at large, there was lukewarm interest among the Sinhalese at best, along with strident opposition by the more nationalistic sections. The Tamils living in the north and east had too much to do putting their shattered lives together to have any energy left to expend on the grand claims of reconciliation. The expatriates were more fortuitously placed to be totally insistent on making maximalist claims and vigorously lobbying the western governments to take a hardline against the Sri Lankan government. The singular bone of contention was about alleged war crimes and their investigation, and that totally divided the political actors over the very purpose of reconciliation – grand or simple.

By far the most significant contribution of the Rajapaksa government towards reconciliation was the establishment of the Lessons Learnt and Reconciliation Commission (LLRC) that released its Report and recommendations on December 16, 2011, which turned out to be the 40th anniversary of the liberation of Bangladesh. I noted the irony of it in my Sunday Island article at that time.

Its shortcomings notwithstanding, the LLRC Report included many practical recommendations, viz., demilitarization of the North and East; dismantling of High Security Zones and the release of confiscated houses and farmland back to the original property owners; rehabilitation of impacted families and child soldiers; ending unlawful detention; and the return of internally displaced people including Muslims who were forced out of Jaffna during the early stages of the war. There were other recommendations regarding the record of missing persons and claims for reparation.

The implementation of these practical measures was tardy at best or totally ignored at worst. What could have been a simple but effective reconciliation program of implementation was swept away by the assertion of the grand claims of reconciliation. In the first, and so far only, Northern Provincial Council election in 2013, the TNA swept the board, winning 30 out of 38 seats in provincial council. The TNA’s handpicked a Chief Minister parachuted from Colombo, CV Wigneswaran, was supposed to be a bridge builder and was widely expected to bring much needed redress to the people in the devastated districts of the Northern Province. Instead, he wasted a whole term – bandying the claim of genocide and the genealogy of Tamil. Neither was his mandated business, and rather than being a bridge builder he turned out to be a total wrecking ball.

The Ultimate Betrayal

The Rajapaksa government mischievously poked the Chief Minister by being inflexible on the meddling by the Governor and the appointment of the Provincial Secretary. The 2015 change in government and the duopolistic regime of Maithripala Sirisena as President and Ranil Wickremesinghe as Prime Minister brought about a change in tone and a spurt for the hopes of reconciliation. In the parliamentary contraption that only Ranil Wickremesinghe was capable of, the cabinet of ministers included both UNP and SLFP MPs, while the TNA was both a part of the government and the leading Opposition Party in parliament. Even the JVP straddled the aisle between the government and the opposition in what was hailed as the yahapalana experiment. The experiment collapsed even as it began by the scandal of the notorious bond scam.

The project of reconciliation limped along as increased hopes were frustrated by persistent inaction. Foreign Minister Mangala Samaraweera struck an inclusive tone at the UNHRC and among his western admirers but could not quite translate his promises abroad into progress at home. The Chief Minister proved to be as intransigent as ever and the TNA could not make any positively lasting impact on the one elected body for exercising devolved powers, for which the alliance and all its predecessors have been agitating for from the time SJV Chelvanayakam broke away from GG Ponnambalam’s Tamil Congress in 1949 and set up the Ilankai Tamil Arasu Kadchi aka the Federal Party.

The ultimate betrayal came when the TNA acceded to the Sirisena-Wickremesinghe government’s decision to indefinitely postpone the Provincial Council elections that were due in 2018, and let the Northern Provincial Council and all other provincial councils slip into abeyance. That is where things are now. There is a website for the Northern Provincial Council even though there is no elected council or any indication of a date for the long overdue provincial council elections. The website merely serves as a notice board for the central government’s initiatives in the north through its unelected appointees such as the Provincial Governor and the Secretary.

Yet there has been some progress made in implementing the LLRC recommendations although not nearly as much as could have been done. Much work has been done in the restoration of physical infrastructure but almost all of which under contracts by the central government without any provincial participation. Clearing of the land infested by landmines is another area where there has been much progress. While welcoming de-mining, it is also necessary to reflect on the madness that led to such an extensive broadcasting of landmines in the first place – turning farmland into killing and maiming fields.

On the institutional front, the Office on Missing Persons (OMP) and the Office for Reparations have been established but their operations and contributions are yet being streamlined. These agencies have also been criticized for their lack of transparency and lack of welcome towards victims. While there has been physical resettlement of displaced people their emotional rehabilitation is quite a distance away. The main cause for this is the chronically unsettled land issue and the continuingly disproportionate military presence in the northern districts.

(Next week: Reconciliation and the NPP Government)

by Rajan Philips

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The Rise of Takaichi

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Japan PM Sanae Takaichi after election (ABC News)

Her victory is remarkable, and yet, beyond the arithmetic of seats, it is the audacity, unpredictability, and sheer strategic opportunism of Sanae Takaichi that has unsettled the conventions of Japanese politics. Japan now confronts the uncharted waters of a first female prime minister wielding a super-majority in the lower house, an electoral outcome amplified by the external pressures of China’s escalating intimidation. Prior to the election, Takaichi’s unequivocal position on Taiwan—declaring that a Chinese attack could constitute an existential threat justifying Japan’s right to collective self-defence—drew from Beijing a statement of unmistakable ferocity: “If Japan insists on this path, there will be consequences… heads will roll.” Yet the electorate’s verdict on 8 February 2026 was unequivocal: a decisive rejection of external coercion and an affirmation of Japan’s strategic autonomy. The LDP’s triumph, in this sense, is less an expression of ideological conformity than a popular sanction for audacious leadership in a period of geopolitical uncertainty.

Takaichi’s ascent is best understood through the lens of calculated audacity, tempered by a comprehension of domestic legitimacy that few of her contemporaries possess. During her brief tenure prior to the election, she orchestrated a snap lower house contest merely months after assuming office, exploiting her personal popularity and the fragility of opposition coalitions. Unlike predecessors who relied on incrementalism and cautious negotiation within the inherited confines of party politics, Takaichi maneuvered with precision, converting popular concern over regional security and economic stagnation into tangible parliamentary authority. The coalescence of public anxiety, amplified by Chinese threats, and her own assertive persona produced a political synergy rarely witnessed in postwar Japan.

Central to understanding her political strategy is her treatment of national security and sovereignty. Takaichi’s articulation of Japan’s response to a hypothetical Chinese aggression against Taiwan was neither rhetorical flourish nor casual posturing. Framing such a scenario as a “survival-threatening situation” constitutes a profound redefinition of Japanese strategic calculus, signaling a willingness to operationalise collective self-defence in ways previously avoided by postwar administrations. The Xi administration’s reaction—including restrictions on Japanese exports, delays in resuming seafood imports, and threats against commercial and civilian actors—unintentionally demonstrated the effectiveness of her approach: coercion produced cohesion rather than capitulation. Japanese voters, perceiving both the immediacy of threat and the clarity of leadership, rewarded decisiveness. The result was a super-majority capable of reshaping the constitutional and defence architecture of the nation.

This electoral outcome cannot be understood without reference to the ideological continuity and rupture within the LDP itself. Takaichi inherits a party long fractured by internal factionalism, episodic scandals, and the occasional misjudgment of public sentiment. Yet her rise also represents the maturation of a distinct right-of-centre ethos: one that blends assertive national sovereignty, moderate economic populism, and strategic conservatism. By appealing simultaneously to conservative voters, disillusioned younger demographics, and those unsettled by regional volatility, she achieved a political synthesis that previous leaders, including Fumio Kishida and Shigeru Ishiba, failed to materialize. The resulting super-majority is an institutional instrument for the pursuit of substantive policy transformation.

Takaichi’s domestic strategy demonstrates a sophisticated comprehension of the symbiosis between economic policy, social stability, and political legitimacy. The promise of a two-year freeze on the consumption tax for foodstuffs, despite its partial ambiguity, has served both as tangible reassurance to voters and a symbolic statement of attentiveness to middle-class anxieties. Inflation, stagnant wages, and a protracted demographic decline have generated fertile ground for popular discontent, and Takaichi’s ability to frame fiscal intervention as both pragmatic and responsible has resonated deeply. Similarly, her attention to underemployment, particularly the activation of latent female labour, demonstrates an appreciation for structural reform rather than performative gender politics: expanding workforce participation is framed as an economic necessity, not a symbolic gesture.

Her approach to defence and international relations further highlights her strategic dexterity. The 2026 defence budget, reaching 9.04 trillion yen, the establishment of advanced missile capabilities, and the formation of a Space Operations Squadron reflect a commitment to operationalising Japan’s deterrent capabilities without abandoning domestic legitimacy. Takaichi has shown restraint in presentation while signaling determination in substance. She avoids ideological maximalism; her stated aim is not militarism for its own sake but the assertion of national interest, particularly in a context of declining U.S. relative hegemony and assertive Chinese manoeuvres. Takaichi appears to internalize the balance between deterrence and diplomacy in East Asian geopolitics, cultivating both alliance cohesion and autonomous capability. Her proposed constitutional revision, targeting Article 9, must therefore be read as a calibrated adjustment to legal frameworks rather than an impulsive repudiation of pacifist principles, though the implications are inevitably destabilizing from a regional perspective.

The historical dimension of her politics is equally consequential. Takaichi’s association with visits to the Yasukuni Shrine, her questioning of historical narratives surrounding wartime atrocities, and her engagement with revisionist historiography are not merely symbolic gestures but constitute deliberate ideological positioning within Japan’s right-wing spectrum.

Japanese politics is no exception when it comes to the function of historical narrative as both ethical compass and instrument of legitimacy: Takaichi’s actions signal continuity with a nationalist interpretation of sovereignty while asserting moral authority over historical memory. This strategic management of memory intersects with her security agenda, particularly regarding Taiwan and the East China Sea, allowing her to mobilize domestic consensus while projecting resolve externally.

The Chinese reaction, predictably alarmed and often hyperbolic, reflects the disjuncture between external expectation and domestic reality. Beijing’s characterization of Takaichi as an existential threat to regional peace, employing metaphors such as the opening of Pandora’s Box, misinterprets the domestic calculation. Takaichi’s popularity did not surge in spite of China’s pressure but because of it; the electorate rewarded the demonstration of agency against perceived coercion. The Xi administration’s misjudgment, compounded by a declining cadre of officials competent in Japanese affairs, illustrates the structural asymmetries that Takaichi has been able to exploit: external intimidation, when poorly calibrated, functions as political accelerant. Japan’s electorate, operating with acute awareness of both historical precedent and contemporary vulnerability, effectively weaponized Chinese miscalculation.

Fiscal policy, too, serves as an instrument of political consolidation. The tension between her proposed consumption tax adjustments and the imperatives of fiscal responsibility illustrates the deliberate ambiguity with which Takaichi operates: she signals responsiveness to popular needs while retaining sufficient flexibility to negotiate market and institutional constraints. Economists note that the potential reduction in revenue is significant, yet her credibility rests in her capacity to convince voters that the measures are temporary, targeted, and strategically justified. Here, the interplay between domestic politics and international market perception is critical: Takaichi steers both the expectations of Japanese citizens and the anxieties of global investors, demonstrating a rare fluency in multi-layered policy signaling.

Her coalition management demonstrates a keen strategic instinct. By maintaining the alliance with the Japan Innovation Party even after securing a super-majority, she projects an image of moderation while advancing audacious policies. This delicate balancing act between consolidation and inclusion reveals a grasp of the reality that commanding numbers in parliament does not equate to unfettered authority: in Japan, procedural legitimacy and coalition cohesion remain crucial, and symbolic consensus continues to carry significant cultural and institutional weight.

Yet, perhaps the most striking element of Takaichi’s victory is the extent to which it has redefined the interface between domestic politics and regional geopolitics. By explicitly linking Taiwan to Japan’s collective self-defence framework, she has re-framed public understanding of regional security, converting existential anxiety into political capital. Chinese rhetoric, at times bordering on the explicitly menacing, highlights the efficacy of this strategy: the invocation of direct consequences and the threat of physical reprisal amplified domestic perceptions of threat, producing a rare alignment of public opinion with executive strategy. In this sense, Takaichi operates not merely as a domestic politician but as a conductor of transnational strategic sentiment, demonstrating an acute awareness of perception, risk, and leverage that surpasses the capacity of many predecessors. It is a quintessentially Machiavellian maneuver, executed with Japanese political sophistication rather than European moral theorisation. Therefore, the rise of Sanae Takaichi represents more than the triumph of a single politician: it signals a profound re-calibration of the Japanese political order.

by Nilantha Ilangamuwa

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Rebuilding Sri Lanka’s Farming After Cyclone Ditwah: A Reform Agenda, Not a Repair Job

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Paddy field affected by floods

Three months on (February 2026)

Three months after Cyclone Ditwah swept across Sri Lanka in late November 2025, the headlines have moved on. In many places, the floodwaters have receded, emergency support has reached affected communities, and farmers are doing what they always do, trying to salvage what they can and prepare for the next season. Yet the most important question now is not how quickly agriculture can return to “normal”. It is whether Sri Lanka will rebuild in a way that breaks the cycle of risks that made Ditwah so devastating in the first place.

Ditwah was not simply a bad storm. It was a stress test for our food system, our land and water management, and the institutions meant to protect livelihoods. It showed, in harsh detail, how quickly losses multiply when farms sit in flood pathways, when irrigation and drainage are designed for yesterday’s rainfall, when safety nets are thin, and when early warnings do not consistently translate into early action.

In the immediate aftermath, the damage was rightly measured in flooded hectares, broken canals and damaged infrastructure, and families who lost a season’s worth of income overnight. Those impacts remain real. But three months on, the clearer lesson is why the shock travelled so far and so fast. Over time, exposure has become the default: cultivation and settlement have expanded into floodplains and unstable slopes, driven by land pressure and weak enforcement of risk-informed planning. Infrastructure that should cushion shocks, tanks, canals, embankments, culverts, too often became a failure point because maintenance has lagged and design standards have not kept pace with extreme weather. At farm level, production risk remains concentrated, with limited diversification and high sensitivity to a single event arriving at the wrong stage of the season. Meanwhile, indebted households with delayed access to liquidity struggled to recover, and the information reaching farmers was not always specific enough to prompt practical decisions at the right time.

If Sri Lanka takes only one message from Ditwah, it should be this: recovery spending, by itself, is not resilience. Rebuilding must reduce recurring losses, not merely replace what was damaged. That requires choices that are sometimes harder politically and administratively, but far cheaper than repeating the same cycle of emergency, repair, and regret.

First, Sri Lanka needs farming systems that do not collapse in an “all-or-nothing” way when water stays on fields for days. That means making diversification the norm, not the exception. It means supporting farmers to adopt crop mixes and planting schedules that spread risk, expanding the availability of stress-tolerant and short-duration varieties, and treating soil health and field drainage as essential productivity infrastructure. It also means paying far more attention to livestock and fisheries, where simple measures like safer siting, elevated shelters, protected feed storage, and better-designed ponds can prevent avoidable losses.

Second, we must stop rebuilding infrastructure to the standards of the past. Irrigation and drainage networks, rural roads, bridges, storage facilities and market access are not just development assets; they are risk management systems. Every major repair should be screened through a simple question: will this investment reduce risk under today’s and tomorrow’s rainfall patterns, or will it lock vulnerability in for the next 20 years? Design standards should reflect projected intensity, not historical averages. Catchment-to-field water management must combine engineered solutions with natural buffers such as wetlands, riparian strips and mangroves that reduce surge, erosion and siltation. Most importantly, hazard information must translate into enforceable land-use decisions, including where rebuilding should not happen and where fair support is needed for people to relocate or shift livelihoods safely.

Third, Sri Lanka must share risk more fairly between farmers, markets and the state. Ditwah exposed how quickly a climate shock becomes a debt crisis for rural households. Faster liquidity after a disaster is not a luxury; it is the difference between recovery and long-term impoverishment. Crop insurance needs to be expanded and improved beyond rice, including high-value crops, and designed for quicker payouts. At the national level, rapid-trigger disaster financing can provide immediate fiscal space to support early recovery without derailing budgets. Public funding and concessional climate finance should be channelled into a clear pipeline of resilience investments, rather than fragmented projects that do not add up to systemic change.

Fourth, early warning must finally become early action. We need not just better forecasts but clearer, localised guidance that farmers can act on, linked to reservoir levels, flood risk, and the realities of protecting seed, inputs and livestock. Extension services must be equipped for a climate era, with practical training in climate-smart practices and risk reduction. And the data systems across meteorology, irrigation, agriculture and social protection must talk to each other so that support can be triggered quickly when thresholds are crossed, instead of being assembled after losses are already locked in.

What does this mean in practice? Over the coming months, the focus should be on completing priority irrigation and drainage works with “build-back-better” standards, supporting replanting packages that include soil and drainage measures rather than seed alone, and preventing distress coping through temporary protection for the most vulnerable households. Over the next few years, the country should aim to roll out climate-smart production and advisory bundles in selected river basins, institutionalise agriculture-focused post-disaster assessments that translate into funded plans, and pilot shock-responsive safety nets and rapid-trigger insurance in cyclone-exposed districts. Over the longer term, repeated loss zones must be reoriented towards flood-compatible systems and slope-stabilising perennials, while catchment rehabilitation and natural infrastructure restoration are treated as productivity investments, not optional environmental add-ons.

None of this is abstract. The cost of inaction is paid in failed harvests, lost income, higher food prices and deeper rural debt. The opportunity is equally concrete: if Sri Lanka uses the post-Ditwah period to modernise agriculture making production more resilient, infrastructure smarter, finance faster and institutions more responsive, then Ditwah can become more than a disaster. It can become the turning point where the country decides to stop repairing vulnerability and start building resilience.

By Vimlendra Sharan,
FAO Representative for Sri Lanka and the Maldives

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