By Captain CoCo
Sri Lankans have shown remarkable patience over the past few years. They endured the economic collapse, stood in endless fuel queues, paid record prices for food and medicine, and accepted painful reforms because they believed those sacrifices were necessary to rebuild the country. Citizens tightened their belts, adjusted their lifestyles, and carried the burden of recovery with the expectation that better days would eventually follow. Yet today, a growing number of people are beginning to ask a difficult question: have ordinary taxpayers already done their part while the institutions responsible for revenue generation have failed to do theirs?
Every month, salaried employees see a substantial portion of their income deducted through taxes before it even reaches their bank accounts. Consumers pay Value Added Tax on a wide range of goods and services. Small and medium-sized businesses struggle with rising operating costs, increasing compliance requirements, and a challenging economic environment. At the same time, the cost of living continues to place enormous pressure on households. While most citizens understand the importance of taxation in rebuilding public finances, many feel that the burden is falling repeatedly on the same group of visible and compliant taxpayers.
Recent increases in government revenue are frequently presented as evidence of success. Certainly, improved revenue collection has played an important role in stabilizing the country’s finances. However, many taxpayers are asking whether this growth reflects genuine improvements in tax administration or whether it is largely the result of higher tax rates imposed on those who are already within the system. There is a significant difference between collecting more revenue because taxes have increased and collecting more revenue because the tax base has expanded, compliance has improved, and previously untaxed economic activities have been brought into the formal system.
The concern among many citizens is that Sri Lanka appears to be relying too heavily on the easiest source of revenue: people who are already paying. A modern tax administration should not focus solely on extracting more from existing taxpayers. Its responsibility should be to identify untapped sources of income, detect hidden economic activity, strengthen compliance among those who avoid their obligations, and create a system that distributes the tax burden more fairly across society. When the same taxpayers continue to carry the largest share of the burden year after year, questions about fairness inevitably arise.
The Inland Revenue Department is not lacking in expertise. It is home to many highly qualified officers with extensive technical knowledge and practical experience. The issue is not whether capable people exist within the institution. The question is whether their knowledge, skills, and creativity are being fully utilized. Taxpayers rarely hear about major initiatives targeting untaxed wealth, sophisticated data-driven compliance programmes, or innovative approaches designed to capture revenue from emerging sectors of the economy. Instead, the public perception is that revenue growth continues to depend primarily on those who are already visible to the system.
This naturally raises questions about leadership. Effective leadership is not simply about administration, meetings, or routine operations. It is about providing strategic direction, encouraging innovation, empowering talented professionals, and preparing institutions to meet future challenges. Following the economic crisis, many citizens expected a fundamental transformation in the country’s approach to revenue collection. They expected new thinking, new technologies, and new strategies that would broaden the tax base while reducing pressure on compliant taxpayers. Yet many feel that the system remains largely dependent on traditional approaches.
These concerns should not be viewed as personal criticism of individuals. Rather, they are questions about governance and institutional performance. Strong institutions encourage fresh ideas, welcome constructive criticism, and continuously seek better ways of achieving their objectives. Weak institutions often become comfortable with routine and rely on familiar methods even when changing circumstances require a different approach. Sri Lanka’s current economic reality demands more than routine administration. It requires innovation, adaptability, and strategic thinking.
The country’s long-term fiscal sustainability cannot depend indefinitely on increasing tax rates. While higher rates may generate short-term revenue gains, they can also discourage investment, reduce economic activity, and place additional pressure on households already struggling with rising costs. Sustainable revenue growth comes from broadening the tax net, improving voluntary compliance, strengthening enforcement against deliberate evasion, and using technology to make tax administration smarter and more efficient.
Ultimately, the debate is about trust and fairness. People are generally willing to contribute when they believe the system is equitable and when they see evidence that everyone is paying their fair share. However, confidence begins to erode when taxpayers feel they are being asked to contribute more while others remain outside the system. A successful tax administration must therefore focus not only on collecting revenue but also on maintaining public trust.
Sri Lanka does not suffer from a shortage of capable officers or technical expertise. What many citizens increasingly question is whether the country’s institutions are making the best possible use of those resources. The public has already borne significant sacrifices in the name of economic recovery. The challenge now is for the institutions responsible for revenue generation to demonstrate the same level of commitment, innovation, and urgency. Economic recovery cannot be built forever on the shoulders of the same taxpayers. A fair and sustainable future requires a broader tax base, smarter administration, and leadership willing to embrace meaningful change.