### 📈 Administration Over Policy: Reforming Sri Lanka’s Tax System

The current debate in Sri Lanka emphasizes that tax administration, rather than further policy changes, is now the primary driver for revenue growth and taxpayer compliance. While policy sets the rules, administration defines the lived experience of citizens and businesses. Core Insights • Experience vs. Rules: Public resistance stems less from tax rates and more from friction in the process—queues, complex forms, and inconsistent enforcement. • Trust as an Asset: Revenue collection depends on institutional trust. Opaque or intimidating administration pushes taxpayers toward the informal economy, while clarity fosters voluntary compliance. • Economic Impact: Frequent policy shifts (rate hikes/exemption cuts) directly hurt household incomes. Administrative reforms—like better call centers and digital portals—increase revenue without adding financial pain. Sector & Strategic Focus • SMEs & Professionals: These groups struggle with uncertainty and fear of penalties for honest mistakes. Service-oriented support is critical for their formalization. • ICT/BPM & Digitalization: Digitalizing the tax net (e.g., e-invoicing, RAMIS upgrades) is a key development tool, especially for the youth entering the workforce. • Apparel & Textiles: Streamlined administrative processes (like faster VAT refunds) are essential to maintain the cash flow of export-oriented sectors. Strategic Path Forward • Shifting the organizational mindset from "control" to "service" can produce outsized gains in revenue. • Strengthening internal coordination and standardizing procedures are prioritized over new legislation. • Effective administration serves as a social contract, transforming tax from "extraction" into "civic participation."