Let us tax for democracy

FEW taxes are intrinsically democratic or undemocratic. They are just a way of funding the Government. But there are occasional exceptions, including a very significant one in Sri Lanka currently: the taxes raised by local Councils, especially property tax (aka rate assessment).

- By Prof. Mick Moore

(By Prof. Mick Moore)

The most important fact about the property tax in Sri Lanka is that it is trivial on virtually any measure. Most households do not pay for it. Those that do mostly hand over a few hundred rupees. It is mainly a small number of large commercial establishments that receive property tax bills that are big enough to notice. It follows that the property tax revenue collected by Municipal, Urban and Rural Councils (Pradeshiya Sabhas) is also trivial. As a proportion of GDP, it is one of the lowest in the world. The total revenue from property tax may not even cover the cost of collection. It makes almost no contribution to Local Council revenues; they depend almost entirely on Colombo to pay their staff and furnish them with a little grant money.