Willing to pay, unable to afford: Rethinking fair taxation in Sri Lanka's 2026 Budget

@ Many Sri Lankans are willing taxpayers but when tax burdens rise beyond what people can realistically bear, even integrity comes at a cost. The 2026 Budget must restore that balance

- By Dr. Nadee Dissanayake

Affordability of taxes is economic. It depends on whether people and businesses can meet their tax obligations without undermining their basic livelihoods

EVERY society depends on two invisible forces: people’s willingness to follow the law and their ability to do so. Taxation sits precisely where these forces meet. Willingness is moral, it comes from a sense of duty, fairness, and trust that paying taxes is part of being a good citizen. Affordability, however, is economic, it depends on whether people and businesses can meet their tax obligations without undermining their basic livelihoods.

In a healthy economy, these two forces reinforce each other. Citizens pay willingly, and governments spend transparently, ensuring a virtuous cycle of trust and responsibility. But in Sri Lanka today, that balance is breaking down. Many citizens, especially youth, freelancers, and small business owners want to comply, but find it increasingly difficult to afford compliance as living costs surge and multiple taxes pile up.

The struggle of the honest taxpayer

Across the country, quiet frustration is growing. Small entrepreneurs, self-employed professionals, and salaried workers register with the Inland Revenue Department, file returns, and pay dues only to find that compliance is eating into their survival. The combined weight of income tax, Value Added Tax, Social Security Contribution Levy (SSCL), Stamp Duty (SD) and other charges leave little room for savings or reinvestment.