Crime

Sri Lanka’s long-running failures in tax policy have worsened the country’s economic collapse and violated the basic rights of its citizens, particularly the right to education, according to a new report by Human Rights Watch (HRW). The report says decades of inadequate taxation, excessive corporate tax breaks, and weak enforcement deprived the government of essential revenue for health, education, and social protection — forcing millions into poverty and hardship. Food prices doubled by September 2023, and when the government began cutting energy subsidies under an International Monetary Fund (IMF) programme, the cost of electricity and transport soared. For families like that of Susikala, a mother of two, the burden was devastating. Her five-year-old son missed school for three months, her daughter walked two kilometres to class to save bus fare, and their electricity was cut off after unpaid bills piled up. The report finds that Sri Lanka’s tax-to-GDP ratio, among the lowest in the world at 7.3 percent in 2023, crippled the state’s ability to fund essential services. Education spending has fallen so sharply that schools have resorted to collecting money from parents for basic materials such as exam paper. HRW warned that the country’s tax system is “inadequate and regressive”, relying heavily on indirect taxes like VAT that hit poorer families hardest, while granting widespread tax incentives to corporations. The organisation urged President Anura Kumara Dissanayake’s administration, elected in 2024, to implement progressive reforms — increasing taxes on income and wealth, ending unjustified corporate tax holidays, and ensuring fiscal transparency. “All governments, including Sri Lanka, are obligated under international law to mobilize maximum available resources to fulfil citizens’ economic and social rights,” HRW said. “Sri Lanka’s failure to do so has had disastrous human rights consequences.”