Sri Lanka nears 16% tax-to-GDP milestone

FINANCE and Planning Deputy Minister Dr. Anil Jayantha Fernando yesterday said Sri Lanka is on the cusp of reaching a long-sought fiscal milestone, with tax revenue expected to rise to 16% of GDP by the end of this year, reflecting a sharp turnaround driven by record collections and renewed public trust in the management of State finances.

- BY CHARUMINI DE SILVA

Speaking at a ceremony at the Inland Revenue Department (IRD) headquarters to present appointment letters to 100 newly recruited Assistant Commissioners, the Deputy Minister said the tax-toGDP ratio has already climbed to 15.4% and is projected to touch 16% by year-end, as all three major revenue-collecting agencies-the IRD, Sri Lanka Customs and the Excise Department have exceeded their annual targets.

He added that the Government's longer-term goal of raising the ratio to 20% is achievable, provided public confidence in fiscal governance continues to strengthen.

Dr. Fernando attributed the surge in tax revenue primarily to the restoration of trust between the State and taxpayers, noting that tax compliance improves when citizens see their contributions being used responsibly for national development.

"Tax evasion had been widespread in the past because people lacked confidence that revenues were being managed transparently or translated into tangible economic benefits," he said.

The current performance, he noted demonstrates that revenue growth is ultimately driven by credibility and accountability rather than technology or regulation alone.