Features
Sri Lanka’s Tax Conundrum – 2022
By Sanjeewa Jayaweera
Despite the old saying, “the only sure things in life are death and taxes,” most of those working in Sri Lanka have never paid direct taxes, and those who pay have been enjoying relatively low taxes rates for several decades. We have also been spared a multitude of other taxes, such as inheritance, wealth and capital gains, that citizens of most developed and developing countries need to pay. So, the publication of the Gazette setting out the proposed increase in changes to tax rates and thresholds to be effective from October 01, 2022, seems to have set the cat amongst the pigeons!
A great deal of indignation and fury as to the impact on their disposable income and lifestyle have been expressed by many over the media and social media. In addition, concern has been expressed that the country will lose many skilled professionals who might migrate to countries with higher tax rates and compliance of nearly 100%!
The corporate sector, which is also being impacted, has demanded from the government greater restraint, accountability, and transparency on its spending. Unfortunately, we Lankans, have, in addition to accepting corruption as part of our country’s DNA, turned a blind eye to the civic responsibility of being a tax-compliant citizen for multiple reasons.
It reached a zenith in the year 2020 when Gotabaya Rajapaksa was elected President and proceeded to be the “Santa Claus” by substantially reducing tax rates, increasing the tax-free threshold for individuals, doing away with certain taxes, and eliminating the well-established means of collecting taxes at source by abolishing PAYE and WHT.
It was absolute madness and a recipe for economic Armageddon which we are, sadly. in the midst of. The impact of the tax cuts is estimated to be around LKR 700 billion. In my article published in the Sunday Island of January 12, 2020, captioned “Sri Lanka’s Tax Conundrum”, I highlighted the inherent risks of the tax cuts and stated, “Based on the Household Income and Expenditure Survey of 2016 and the dispersion of the average household income, the recently introduced tax rates and increase in the threshold will only benefit a smaller segment of the population who in all probability do not need this type of assistance from the government.
I say this at the risk of getting a sharp poke in my ribs from some of my former colleagues still in employment. In my case, had I been in employment, the incremental income would most probably be spent on a few additional overseas trips, buying a few expensive imported branded gadgets and a higher-class BMW.Therefore, I am not sure I would have contributed to the increase in aggregate demand for our GDP. As to how a household spends, the incremental income would certainly depend on their income level. However, there is no doubt the greatest beneficiaries would be those who are not currently struggling to make ends meet.”
Not too many expressed such concerns because many were delighted that they would receive a windfall. But, unfortunately, those irresponsible and hare-brained decisions have seen tax revenue as a percentage of GDP declining to 7.3% inclusive of the covid impact when it should be around 15% for a developing country. So, the need to reverse those irresponsible tax cuts and increase our tax revenue is a fact that needs to be understood and appreciated.
Taxation, Purposes and Justification
“Taxation is when a taxing authority, usually a government, levies or imposes a financial obligation on its citizens or residents. Since ancient times, paying taxes to governments or officials has been a mainstay of civilization. The government compels taxation through an implicit or explicit threat of force. Taxation is legally different from extortion because the imposing institution is a government, not private actors. The formulation of tax policies is one of the most critical and contentious issues in modern politics.” (Investopedia)
The most basic function of taxation is to fund government expenditures. Varying justifications and explanations for taxes have been offered throughout history. Before, taxes were used to support the ruling classes, raise armies, and build defences.
Later justifications have been offered across utilitarian, economic, or moral considerations. Proponents of progressive levels of taxation on high-income earners argue that taxes encourage a more equitable society. Higher taxes on specific products and services, such as tobacco or gasoline, have been justified as a deterrent to consumption.
Which Country Has the Highest Income Taxes?
As of 2022, the top 10 countries with the highest marginal income taxes (the rate on the top slab) are:
Ivory Coast – 60%, Finland – 56.95%, Japan – 55.97%, Denmark – 55.90%, Austria – 55.00%, Sweden – 52.90%, Aruba – 52.00%, Belgium – 50.00%, Israel – 50.00%, Slovenia – 50.00%
In South Asia, the highest marginal rates are:
India 30%, Pakistan 35%, Bangladesh 30%. In India, there is a 10% income tax surcharge on certain taxpayers, and the single-person tax-free allowance is INR 250,000 for a year.
So the Sri Lankan marginal rate of 36% is not as outlandish as it appears, although it is being imposed at a time when inflation is over 70% which is a challenging proposition.Research indicates those living in Nordic countries with the highest rates of taxes are often deemed the happiest!
Why do we hate to pay taxes?
“Because as often as not, tax dollars get spent for things the public neither wants nor needs and would not choose to pay for. I wouldn’t mind taxes so much if all my tax money was spent wisely and in agreement with my perspectives.” (origin of quote unknown)
“No nation grew prosperous by taxing its citizens beyond their capacity to pay. We have a duty to ensure that every penny that we raise in taxation is spent wisely and well.” (Margaret Thatcher)
I believe the above quotes capture most taxpayers’ feelings in Sri Lanka and the world. The word “spent wisely” is a dilemma for all of us as our politicians are everything but wise!
Public Sector Salaries and Pensions
Currently, nearly 80% of government revenue is spent paying public sector salaries and pensions. Although an efficient and lean public service is a must and should attract some of the country’s best talent, successive governments abused their authority by giving jobs to their supporters when there was no vacancy.
In many developed countries, unemployed people are paid an unemployment benefit for a certain period of time. In Sri Lanka, those who govern have given unemployed people jobs for life, including a pension! The net result is that we have a bloated and inefficient public sector that is a drain on taxpayer money.
Defence Expenditure
The appropriation bill for 2023 submitted to parliament requests that LKR 360 billion be allocated to the forces and a further LKR 116 billion to the police; in contrast, only LKR 184 billion and LKR 267 billion are being allocated to education and health.A justifiable question of whether this allocation falls within the definition of “spending wisely” needs to be responded to by the government. Undoubtedly, the bulk of the expenditure is spent on remuneration and not acquiring equipment.
Recently a former cabinet minister, much disliked by the public, raised a question in parliament as to why we need an armed force of 250,000 when there is no ongoing conflict or any such possible threat in the foreseeable future.
This matter was also widely discussed on a TV chat show by several prominent social activists and commentators. The consensus was that the defence budget needed to be reduced and the savings be allocated to education and health.I appreciate that there will be comments that pruning defence spending smacks of ingratitude to soldiers who fought during the civil conflict. However, given that 13 years have passed since the end of the conflict, it is time that the government take steps to demobilize and retrain the excess soldiers.
The Inland Revenue Department (IRD)
The mission statement of the IRD is “To collect taxes in terms of relevant tax and other related laws, by encouraging voluntary compliance while deterring tax evasion and tax avoidance, and to enhance public confidence in the tax system administered by the Department of Inland Revenue by administering relevant tax and other related laws in a fair, friendly and expeditious manner and thereby facilitate a beneficial tax culture.”
Despite this mission statement, most will agree that the IRD has not performed. Voluntary compliance has not worked, and neither has constantly changing governmental tax policies assisted. My own experience is that IRD officers tend to go after those who are currently paying taxes for additional taxes rather than identifying those who are evading taxes.
That the department should be assisted with cutting-edge technology is to state the obvious. Whether the RAMIS system has facilitated this is questionable, although most corporates and a few individuals submit their tax returns through the system. A critical KPI for the department should be how many forced registrations were done during the year and how much tax, including back taxes and penalties, was collected from such registrations.
Tax Avoidance and Evasion
The difference is that tax avoidance is an action taken to minimize tax liability, whereas tax evasion is the failure to pay or deliberate underpayment of taxes. Reducing tax liability and deliberate underpayment of taxes can sometimes be a fine line. My interaction with many small and medium enterprises (SMEs) is that many don’t pay taxes or that what they do pay is minimal. In addition, many professionals are assumed to be non-compliant.
Many years ago, the GMOA and some professional bodies were lobbying the government to reduce their income tax rate from 24% to 16% after the Supreme Court dismissed their plea. The request was for professionals to be included within the definition of an SME who enjoyed a tax rate of 14%!
There is no doubt that many who should be paying direct taxes are not in the tax net as they should be. It is up to the IRD to ensure that they live up to their mission.
Conclusion
As I write this article, the President has on TV explained the reasons for higher direct taxes and that the IMF program is contingent on these mandated rates. Those conversant with economics and finance will appreciate the need for higher taxes for our country to come out of this self-inflicted economic disaster. But we must grit our teeth, curse the politicians, and pay up.
However, it is vital that the government spend our money transparently and not be profligate. We, the citizens, must be at the forefront of demanding that corruption among politicians cease, expenditures are rationalized, and those responsible are held accountable.
Features
Addressing human rights needs multi-pronged approach
by Jehan Perera
The ongoing 63rd session of the United Nations Human Rights Council, which runs from September 7 to October 7, 2026, in Geneva is important to Sri Lanka. Its outcome will send a signal to other international actors, including the European Union, as to whether Sri Lanka’s reform policy is on track. The written update on Sri Lanka, prepared by the Office of the United Nations High Commissioner for Human Rights under High Commissioner Volker Türk and presented by Deputy High Commissioner Nada Al-Nashif, has taken a more holistic approach to the government’s performance over the past year. It acknowledged the progress Sri Lanka has made under the NPP government in relation to accountability for financial fraud and other economic crimes. At the same time, the High Commissioner’s update made clear that progress in relation to economic crime cannot be equated with progress in relation to accountability for grave human rights violations committed during the armed conflict and in other periods of political violence.
The government may have felt sufficiently confident that its response to the High Commissioner’s update could be handled by its representative in Geneva and did not require the attendance of Foreign Minister Vijitha Herath. Sri Lanka’s representative Sumith Dassanayake called for a fundamental review of country-specific mandates within the UN Human Rights Council. Sri Lanka has been facing repeated scrutiny in the form of successive UNHRC resolutions from 2012 onwards. Ambassador Dassanayake argued that such mandates should not continue indefinitely and must be regularly assessed against measurable objectives and tangible outcomes. This may reflect confidence that its record of reform is beginning to receive recognition internationally. The reports and statements at the Human Rights Council acknowledged progress in the government’s efforts to address corruption and economic crime.
The government’s anti-corruption drive has included investigations into allegations involving individuals who held the highest political offices in the country. The arrest of former President Ranil Wickremesinghe in connection with alleged misuse of public funds, and the investigation into the controversial SriLankan Airlines Airbus transaction involving former President Mahinda Rajapaksa’s son, are examples of the reach of these investigations. The arrest of SLPP National Organiser and Member of Parliament Namal Rajapaksa in connection with allegations relating to the Airbus purchase scandal has also demonstrated that the government is willing to pursue cases involving politically powerful figures.
Wide Range
The ongoing investigations appear to encompass a wide range of parliamentarians and government members, both past and present. They suggest that accountability for corruption is not being confined to lower-level officials or to individuals who lack political influence. This is precisely the kind of accountability that the public has long demanded and that previous governments have too often failed to deliver. The government is also reaching into the upper levels of the military hierarchies of the past. The case in which 11 young men, most of them Tamil, disappeared after being abducted in Colombo between 2008 and 2009 involved allegations that some families were asked to pay ransoms. The investigation into this case has reached senior military figures. The willingness to pursue such cases is important because it challenges the assumption that those who exercised power during the war are beyond the reach of the law. Such cases would provide a practical test of whether the government’s commitment to accountability for economic crimes is part of a broader commitment to the rule of law.
Success in prosecuting corruption cannot substitute for justice for those who were unlawfully killed, disappeared, tortured or otherwise victimised. The UN report noted that there had been no recognition or accountability for crimes under international law, gross human rights violations and serious violations of international humanitarian law committed by all parties during the war. The government has yet to establish a credible and effective process to address the many cases of enforced disappearance, extrajudicial killing, torture and other serious violations. The government needs to take the international commitments it has inherited on human rights issues seriously. It needs to adopt a multi-pronged approach and go beyond focusing primarily on financial and corruption-related accountability.
Need Action
As a member of the international community, Sri Lanka has a responsibility to abide by the commitments it has made. It cannot selectively uphold international obligations postponing those that are politically difficult. Also, as a small country, Sri Lanka has a self-interest in ensuring the survival of international law, which is all that it has to protect it from the depredations of the bigger international actors. The erosion of international law by powerful states makes it all the more important that smaller states uphold the principles on which the international system is based. Sri Lanka cannot credibly appeal to international law when it is threatened from outside while disregarding its own obligations within. Sri Lanka also needs to win the confidence of its own population that it is committed to justice and equality for all. Public opinion polls and community-level research have disclosed that ethnic and religious minorities are appreciative of the sense of greater security they enjoy under the present government from ethnic or religious extremists.
But a sense of security is not the same as the fulfilment of rights. As far as the Tamil people are concerned, the government has yet to deliver on several of its specific promises. These include the long-standing problems of missing persons, the release of political prisoners who have been members of Tamil militant organisations, and the return of land taken over for military purposes during the war. The issue of Buddhist statues and archaeological sites found on their properties which are then taken from their control continue to trouble them especially as they see no signs of resolution of those disputes. The issue of pastureland in the east of the country in Mylathamadu is particularly concerning to them as they see orders by successive presidents, both President Ranil Wickremesinghe and President Anura Kumara Dissanayake, being disregarded on the ground. The Mylathamadu pastureland dispute is where traditional Tamil dairy farmers have engaged in multi-year protests against the ongoing encroachment of their ancestral grazing lands by Sinhalese crop cultivators relocated under government development schemes.
The government’s failure to hold Provincial Council elections is particularly troubling. The provincial council system is the only one that can provide the Tamil people and other ethnic minorities the opportunity to wield political power and exercise a measure of self-determination in the areas in which they are the numerical majority. The continued postponement of Provincial Council elections therefore has consequences that go beyond an ordinary electoral delay. It deprives communities of an important constitutional avenue for democratic participation and power-sharing. The ethnic and religious minorities appreciate what the government is doing in the larger national interest, but they must not be made to feel that their special concerns are being ignored. The government cannot resolve Sri Lanka’s entire legacy of rights violations overnight. But it does need to demonstrate that it is willing to move forward on multiple fronts, not only on a few.
Features
The emptying university: why are academics leaving?
by Hasini Lecamwasam
Brain drain in Sri Lanka is at an all-time high. The latest Human Flight and Brain Drain Index for 2024 shows that we are 16th of 175 countries on this count, and first in South Asia. That this is a crisis goes without saying. Brain drain affects all sectors, and is a huge strain on the resources of a developing country. Particularly in Sri Lanka, where considerable public investment is made in the moulding of professionals through the system of free education, this amounts to transferring the resources of poorer countries to richer ones with top migration destinations. It is, therefore, important to consider the push and pull factors behind skilled outmigration, specifically from the public university system of Sri Lanka, a key focus of the Kuppi column.
From frustration to exit
Several bitter realities in our crumbling public university system act as push factors in the migration decisions of academics. Many essays on this column have, over several years, attempted to highlight numerous aspects of this erosion. Perhaps, primary among them is the lack of adequate funding, which has debilitating ramifications for the system: very little investment is made in the up-keep of infrastructure (and even less in its expansion), resulting in serious constraints in accommodating growing batches of students and the wellbeing of the staff (particularly in regional universities); research funding is negligible, severely curtailing academics’ ability to effectively discharge their primary duty of teaching which should ideally be informed by their research (and the research of others, access to which is also, unfortunately, mediated by funding); a funding crunch also means a slash in (or greater constraints on) recruitments, increasing the workloads of academics, currently in service, and eating into the quality of their teaching and research.
What recruitments are done frustrate those with any faith in merit. As many of our interventions in this column have shown, recruitment processes are characterised by archaic selection criteria that place very little weight on a candidate’s postgraduate growth and the advantages of interdisciplinary training. Added to this is the general preference for ‘culturally compliant’ candidates who would not rock the boat too much. The combined effect is that those with the capacity and spirit to try out innovations in education are discouraged from joining or staying on in the public university system. Some, or many, of them may instead seek appointments abroad.
A thread that binds all of these problems together is pervasive hierarchy which, again, many interventions on this column have sought to highlight. It is the interest in preserving hierarchy that leads to the preference for alumni in recruitment processes. Hierarchy within universities can be particularly frustrating for younger faculty and women, who typically have to bear the brunt of the workload of their senior, often male, colleagues. In a context of funding, and, therefore, recruitment, restrictions, this translates into a disproportionate burden being placed on junior (usually female) faculty, seriously hindering their prospects of growing into successful academics due to the time constraints within which they have to operate. Junior academics, therefore, are more likely to look to educational institutions abroad for what they hope would be a different work culture that respects them more.
Ideological ruses
On top of these structural frustrations are also the workings of neoliberal ideology. For one, the nature of relations between the global metropole and peripheral countries like Sri Lanka largely dictates what is desirable and what is not. The apparent lifestyles of Western countries – from food to clothing, housing, appliances, and so on – have continued to lure people from the periphery with the promise of a ‘better’ life, alongside better career advancement opportunities. This, of course, masks much of the struggle that goes on behind the scenes to survive in Western societies. For instance, in most cases highly attractive public infrastructure such as roads, public transport, clean air, quality control of food, and so on belie the astronomical privatised costs of healthcare and education. Health insurance is usually mandatory and steep in most high-income settings, while even subsidised education (for which eligibility criteria are strict) creates a serious dent in household earnings. Of course, the happy images of glossy trams and gleeful international travellers don’t convey this.
A second ideological ruse is the myth of greater opportunities and recognition abroad. While there is no denying that local skilled sectors – be it higher education, health, civil service, or private white-collar positions – are replete with issues that inhibit merit-based professional advancement, the notion that things are fundamentally different in Western countries stems from an uninformed optimism. As is now increasingly known and discussed, Western labour markets are notoriously racialised, and equivalent skills are rarely treated as such. Instead, it is usually demanded that skilled migrants clear certain formal examinations in their host countries. In fields like medicine, this is followed by an interview that may also be racially prejudiced. Once these initial steps are cleared, remuneration reverts to square one irrespective of experience accumulated abroad, not to mention the many subtle aggressions, rejections, and trials one has to go through in the negotiation of everyday life. In the many cases where professional qualifications are used as leverage for a move abroad, sights are set on a better future for one’s children, which again is informed by the misplaced faith in greater opportunities and a lack of awareness of the factors outlined above. Needless to say, in the global swing to the Right, things have become even more challenging. In such a context, considering the few rare cases where skilled migrants live extremely comfortable lives as the norm becomes a dangerous misconception.
The two ideological pull factors mentioned above are complemented by a push factor, which has to do with a highly classed understanding of what a white-collar professional is due in their society. Many of these aspirations are clearly articulated in academic trade union action demanding separate quotas for school entry, increased fuel allowances, winning back the presently stalled vehicle permit scheme, salary hikes, and so on. While working people have every right to agitate for better material conditions, insofar as it remains unconnected to a broader movement for improving the conditions of the lot of the working class, it remains self-serving and very much within the class logic of capitalist society. Since these demands are articulated as a means of maintaining distinction, it is clear that they are not envisaged as part of a class movement. The frustration of not having these needs for distinction satisfied may push some to seek greener pastures abroad, at least financially, (perhaps as a means of social mobility based on it), only to be disappointed on most occasions.
What is to be done?
Addressing the systemic push factors listed above requires, first and foremost, greater allocations for free public higher education. This would immediately translate into more recruitments and less work per academic, and better research and teaching in the long haul. An increase in funding would also ideally lead to greater infrastructural investments, especially including improving the living conditions of those who work in regional universities amid untold hardships. Next, fairer, more creative, and, therefore, more effective recruitment policies are badly needed to attract talented individuals to university positions. Rather than carving out a ‘special category’ for academics to achieve this purpose, which is informed by a classed logic, this needs to be done through fundamental reforms in recruitment processes. Third, a persistent attack on the entrenched hierarchy within universities through internal reform is much called for. Reforming recruitment practices will go a long way towards addressing this. Measures should also be taken to introduce more stringent policies against SGBV (not to mention ragging, even though it is not directly connected to brain drain). Such measures would create a safer, fairer, and more attractive workplace, which would give more reasons for people to stay.
On top of greater allocations, we also need a transformation of our aspirations themselves if this situation is to change. That necessitates a kind of education capable of questioning the ‘paradise’ conception of Western societies, and lays bare their colonial material and ideological dimensions, in both their historical and contemporary manifestations. These colonial understandings of the ‘good life’, moreover, have devastating ecological implications for the planet, not to mention social justice. An education with the ability to transform this mindset would hopefully prove to be more than a mere path to social mobility, rather being a tool of social emancipation that renders mobility moot.
(Hasini Lecamwasam is with the Department of Political Science, University of Peradeniya)
Kuppi is a politics and pedagogy happening on the margins of the lecture hall that parodies, subverts, and simultaneously reaffirms social hierarchies.
Features
Friends favourite Suzi Croner returns for Oktoberfest 2026
Charming audiences in Switzerland as Suzi Flückiger, Sri Lanka’s own Suzi Croner is coming home… for a very special occasion.
The bubbly former frontline vocalist of 90s band Friends will take the stage at a popular venue in Colombo for Oktoberfest 2026.
Known in Europe for her country and classic hits, Suzi has remained a much-loved name back home. This will be a rare chance for local fans to see her live and celebrate the voice behind so many Friends memories.
Oktoberfest 2026 in Colombo promises an evening of live music, traditional Bavarian food and beer, colourful dirndls and lederhosen, folk dancing, and plenty of community cheer.

Suzi Croner (Flückiger)
Against this lively backdrop, Suzi will take the stage for a special solo set, featuring her own pre-recorded music. She performed at the event last year too, as a solo artiste, but a German band providing the music.
This year, however she says, it’s a different scene.
“The novel attraction will be the dancers from Germany — all girls, clad in German outfits,” Suzi said. She added that the event will also highlight the activities generally connected with Oktoberfest, which should generate a lot of fun and excitement for those who join her in Colombo next month.
Suzi has become a much-in-demand artiste in Europe, and has even performed Down Under, in Melbourne.
In Switzerland, where she has been based for the past 42 years, she continues to charm audiences with country and classic hits, performing at private events and community nights across Europe.
“My weekends are generally loaded with my work as a singer,” she said. “And I also play tennis three times a week, because I need to keep fit to entertain my audience in an active way.”
Her repertoire is made up mainly of Swiss, German and English songs.
And true to form, Suzi loves springing surprises.
“So watch out when you join me at Oktoberfest 2026, in Colombo!” she said.
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