ECONOMYNEXT – Sri Lanka has presented a budget without tax new shocks, maintain tax stability, Minister of Labour and Deputy Minister of Finance and Planning Anil Jayantha Fernando said delivering the closing speech at the budget debate.
“The budget used to be a magic box where people expected benefits and others were looking at new taxes, Minister Fernando said.
“We did not put any new taxes to squeeze people’s necks further. We are instead making the tax system more efficient, improving tax compliance. We are using technology to widen the tax net. As a result, the state revenues are going up.”
Sri Lanka customs had exceeded its revenue target for 2025, he said.
In 2025 Sri Lanka also opened vehicle imports, restoring a revenue source blocked by macro-economists.
When macro-economists cut rates with inflationary open market operations and trigger forex shortages, vehicle imports are usually restricted resulting in revenue losses, triggering what critics call ‘cascading policy errors’.
The import controls result in revenue losses which require higher interest rates or money printing. In 2020 after deploying aggressive rate cuts, over 3,000 imports were banned.
Sri Lanka started ad hoc tax increases within two years starting the central bank and injecting money to keep rates down. The import duty hikes of the first currency crises, were then normalized, as were income tax surcharges.
The pattern has not changed, as currency crises followed currency crises and one IMF program followed another, until the country ended up in sovereign default in 2022.
Meanwhile Minister Fernando said there was a time when people hid cigarettes, before the budget, expecting taxes to go up.
However governments in countries with parliaments are not supposed to impose taxes at mid-night without prior debate. The origin of parliamentary system in Britain came from the principle of taxation by consent, where taxes are imposed after debate and a vote.
But Sri Lanka imposes taxes by mid-night gazette, especially on foods, to support various politically powerful production lobbies, farmers or collectors. (Colombo/Nov16/2025)
