📈 Moral Contract: AKD’s Forthcoming Budget Must Balance Revenue Targets & Taxpayer Value

• Sri Lanka’s Economic Context: President Anura Kumara Dissanayake (AKD) faces rising public pressure over high tax burdens and underperforming public services ahead of his third Budget, following strict International Monetary Fund (IMF) guidelines. • IMF Targets vs Realities: • Total revenue reached 16.6% of GDP in 2025 (exceeding the estimated 14.6%). • Tax revenue hit 15.4% (surpassing the 13.6% target). • Primary surplus achieved 5.4% (well above the 2.3% requirement). • Overperformance was driven largely by temporary motor vehicle import taxes and lower-than-budgeted capital expenditure, rather than structural improvements. • Tax Inequities & Sector Impacts: High consumption taxes (VAT) disproportionately impact lower-income groups, while salaried workers and small enterprises face heavy compliance burdens. • Core Priorities for the Next Budget: • Deliver fair tax relief without compromising overall fiscal stability. • Improve public service delivery across healthcare, education, and transport. • Enforce transparency and strict anti-corruption measures to restore taxpayer trust. • Protect long-term growth investments over short-term cuts.