My Tax Plan For Sri Lanka

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First, legalize marijuana. That makes money immediately, it’s part of our ancient culture, great for tourism and — with age limits and psychological warnings — fun. Easy money.

Then the hard stuff. No, not heroin.

Customs

The biggest drug fucking up the Sri Lankan goverment is Customs.

We’re an island with high taxes which means A) everything is expensive B) we can’t import supplies to make profitable, value-added exports. Poor consumers end up funding our government and our companies can’t compete globally.

Customs duties are easy to collect, but they strangle the growth and competitiveness of our economy.

I would eliminate customs taxes and duties almost entirely. That would mean the government would lose 60% of its revenue base in the short term, and a bunch of artificially protected Sri Lankan companies would go under. So this is basically impossible, but hear me out.

Direct Taxes

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If you don’t have high customs duties, everything is suddenly cheap. Now every product — from cars to tiles to diapers — is 3x cheaper, even with 15% VAT. People want that, but they have to do something first. They have to have a tax file.

If you want the cheaper prices, you have to show a tax identification number. If your company wants cheap imports, all the Directors had better show their TINs. Suddenly a lot more people will have tax files, and the government can collect a lot more direct taxes. Obviously assuming they can get off their asses and collect taxes. Maybe move the people from Customs over, they work on commission.

You can also use the PAYE system (Pay As You Earn). You only get the discounts if your PAYE taxes are up to date. Whatever the mechanism (a big if) the goal is to have a more progressive tax system (the rich pay more) on a much wider base of people. Including the government sector. Government employees should pay their fair share as well. And tuition teachers, and other people that get paid (a lot) in cash. Again, politically impossible, but just putting it out there.

Changing The Balance

Through these two radical moves, you can flip the current balance of 20% direct taxes and 80% indirect. The government would still collect VAT and excise (indirect taxes) but the vast majority of revenue would come from a progressive income tax (direct). This is more fair, and it allows the economy to grow. People will be able to buy more and create (and export) more. Plus you could smoke marijuana.

*Tax policy is obviously more complicated than this. Please tell me how I’m wrong.

Written by

A writer living in Colombo, Sri Lanka. He/him. indi@indi.ca. Videos: tiny.cc/indication. Patreon: patreon.com/indication

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