DIRECT TAXES TO ADDRESS FAIRNESS
Governor of the Central Bank of Sri Lanka Dr. Indrajit Coomaraswamy recently stated that Sri Lanka has “one of the most regressive and unfair tax systems in the world.”
He noted that for the state to continue providing free education and healthcare, Sri Lankans would need to pay taxes and that it would not be possible to benefit from Scandinavian type social welfare while paying Hong Kong rates of tax.
Sri Lanka collects 83 percent of its tax revenue from indirect taxes, which treat the rich and poor equally, according to Coomaraswamy. To address this, he asserts that Sri Lanka needs to improve its indirect to direct tax ratio to about 60:40 whereby people would have to pay more in direct taxes for a fairer system.