Although tax hikes have emerged as a pressing challenge for many, especially key professionals such as doctors and high-ranking public officials, the fact that tax hikes are an integral part of the much-needed economic revival is undeniable. As a country that lost a considerable share of its tax revenue in 2019 due to tax cuts that were implemented during the tenure of erstwhile President Gotabaya Rajapaksa and then-Prime Minister and Finance Minister Mahinda Rajapaksa, the country is facing a challenge of not only reversing that damage but also increasing the tax revenue to an optimum level that is sufficient to manage increased public expenditure. 

The ongoing protests against tax hikes emphasise that a considerable segment of the population, especially the above mentioned professionals, is not ready for these tax hikes. While their furore, triggered also by deteriorating living conditions, is justifiable and understandable, their contribution as high-income earners is not something Sri Lanka could forego. Therefore, especially in a context where anti-tax hike protests are already costing the country a lot, as was experienced in the case of recent protests at the Colombo Port, this situation needs to be dealt with immediately. However, dealing with this issue requires an approach that is based on awareness, understanding, transparency, and mutual agreement, because what the proper implementation of the new tax policy requires is not the public’s forced compliance but informed support. Such an approach is a necessity if this tax policy is to be sustainable and is to bring about the expected results. 

President and Finance Minister Ranil Wickremesinghe has stated that he is meeting trade union representatives today (10), to discuss the latter’s concerns with regard to tax hikes. This is in a context where the Government Medical Officers’ Association (GMOA) has claimed that during the discussions it had with the President, a consensus was reached with regard to solutions to their issues, while the President’s Chief of Staff Sagala Ratnayake has, in response to anti-tax hike protests, stated that the Government will review and introduce amendments to the new tax policy. These are signs that the Government too has identified the need to go ahead with the new tax policy together with taxpayers instead of against them.

However, trade unions do not represent every taxpayer’s sentiments, and the decisions that the political authority reaches with them are not always in favour of taxpayers. At the same time, it is crucial to acknowledge that it is not just income tax payers, but that many who do not have to pay income tax are also affected by many forms of indirect taxes that were increased amidst the economic crisis. Therefore, a broader programme, which targets taxpayers in general, is necessary.

The foremost objective of this programme should be raising awareness of why the recent tax hikes are decisive in economic recovery, and how they benefit the public. The Government should understand that the best way to encourage the people to actively support the new tax system despite the prevailing hardships is convincing them that tax hikes are a key factor on which economic recovery depends. It should therefore explain with a concrete plan and transparency as to how the increased taxes and tax revenue would be utilised. In addition, one of the reasons for the people’s reluctance in paying taxes is corruption on the part of the political authority, which has been stressed many times by the public during interviews with The Daily Morning with many people questioning “why should we pay more taxes for politicians to steal and have better lives?”. Therefore, concrete and transparent anti-corruption measures are a necessity to convince the public that their tax money would be put to good use.

In this process, mere promises or orders are unlikely to help the Government to obtain the public’s support. The public should feel that they were heard, their tax money would not be squandered, and that the Government would at some point implement tax revisions in the public’s favour.