• Targeted relief for those affected by tax burden  
• IMF conditions prevent lifting existing taxes 
• Govt has to show how revenue loss would be offset 

The Government is unlikely to make major changes to existing taxes in the upcoming Budget, Trade, Commerce, Food Security and Cooperative Development Deputy Minister R M Jayawardena indicated, assuring that relief will instead be provided to people affected by the tax burden.

Speaking to The Daily Morning yesterday (02), he said that Sri Lanka's agreements with the International Monetary Fund (IMF) did not allow the Government to remove existing taxes without demonstrating how the resulting revenue losses would be offset. "Under the agreements with the IMF, we can’t afford to lose tax revenue. Therefore, we can’t simply remove the taxes that’ve been imposed. That’s one of the conditions."  

He added that the Government had therefore opted to maintain the tax revenue and provide targeted assistance to affected groups. "What we’ve done is provide relief to the people without reducing taxes, while continuing to find ways to generate the required tax revenue. For example, the Government provided a Rs 6,000 allowance for schoolchildren to purchase stationery last year (2025). We’ll continue to launch such programmes." 

Jayawardena further said that the Government had discussed the issue with the IMF and requested permission to provide assistance to people affected by taxes if the taxes themselves could not be removed. "We requested that, if taxes couldn’t be removed, we should be given the opportunity to provide relief to the people affected by them. They didn’t object to our request."

Sri Lanka's economic reform programme with the IMF, supported by an Extended Fund Facility, places considerable importance on strengthening Government revenue and maintaining fiscal discipline. The programme includes commitments to meet revenue targets and continue reforms to the tax system. However, the existing tax framework has drawn criticism from members of the public and business groups, with calls for taxes to be reduced or removed to ease the cost of living and the cost of doing business. Demands have included changes to the Value Added Tax and other taxes affecting goods, services and income.