To improve education, fix the tax system

IN November 2024, Sri Lanka's Supreme Court issued an unusual ruling: senior Government officials had breached the public trust by drastically cutting taxes in 2019, setting off a "domino effect" that ended in economic collapse in 2022.

- By Sarah Saadoun

Revenue increases should be used to increase social spending, including a goal of moving education spending towards 4 to 6% of GDP.

The Government's debt default led to a sharp increase in prices, especially for food and transportation, as well as job and wage cuts, the effects of which are still ongoing.

Protests that overthrew Gotabaya Rajapaksa's government, and subsequent elections that brought Anura Disanayake to power, make clear that Sri Lankans are determined to set a new economic course. The Government has already taken some steps, but the reforms aren't deep enough to get at the root of the problem.

The Supreme Court case was focused on the immediate lead up to the crisis, but we found that the root of the problem goes back decades.

In the late 1970s, Sri Lanka began an economic shift including tax policies that generated woefully low revenues, and favoured corporations and the wealthy.

This not only sowed the seeds of the 2022 crisis but also meant Government spending that is essential to human rights has lagged far behind growth for decades. By the 2010s, for example, Sri Lanka's education spending was under 2% of GDP, before falling in 2022 to just 1.5%-the third-lowest rate in the world.