How Did Sri Lanka's Tax Policies Fuel the 2022 Economic Crisis?
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Synopsis
The Human Rights Watch report sheds light on how Sri Lanka's tax policies have not only triggered a severe economic crisis in 2022 but have also decimated education funding. This challenging landscape underscores the need for systemic reforms to support equitable public services.
Key Takeaways
- Sri Lanka's tax policies have been linked to the 2022 economic crisis.
- The country faces chronic underfunding in education and public services.
- HRW urges reforms for a progressive tax system.
- Investment in education is critical for the nation's recovery.
- Government action is needed to meet human rights obligations.
New York, Oct 15 (NationPress) The advocacy organization Human Rights Watch (HRW), based in the United States, has disclosed that Sri Lanka's tax strategies significantly contributed to the nation's catastrophic economic crisis in 2022, which in turn exacerbated the persistent underfunding of education and essential public services.
In their comprehensive 101-page analysis, titled 'Tax Handouts, Struggling Schools: The Impact of Low Taxes on Sri Lanka's Economic Crisis and Educational Decline', HRW outlined how consecutive Sri Lankan administrations implemented policies that led to insufficient revenue generation.
These policies, according to the rights organization, not only precipitated Sri Lanka's debt default but also caused a prolonged downturn in public education investment as a percentage of Gross Domestic Product (GDP), positioning the country among the lowest globally in this regard.
“For many years, Sri Lanka has been trapped by economic strategies that deprive the government of essential revenue, focusing narrowly on GDP growth,” stated Sarah Saadoun, a senior economic justice researcher at HRW.
“This has resulted in education funding lagging significantly behind growth rates, transforming the nation from a global pioneer in public education to a slow mover,” she added.
The report emphasized that the education sector exemplifies a broader disregard for social investment, with the squandered potential most apparent in a domain where Sri Lanka once enjoyed global acclaim.
HRW noted that the new government of Sri Lanka has undertaken some commendable initiatives, such as providing bursaries of Sri Lankan Rupees 6,000 (approximately $20) to certain families to assist with educational expenses; however, the education budget has seen only marginal increases.
“It is imperative to further enhance the education budget, aiming for the internationally recognized target of allocating 4 to 6 percent of GDP to education,” urged the rights organization.
HRW called on the Sri Lankan government, under the leadership of President Anura Kumara Dissanayake, to promptly implement measures that uphold human rights obligations and reform a system that currently benefits corporations and the affluent while failing to yield sufficient revenue.
“Sri Lanka's economic predicament illustrates that mere growth is inadequate to fulfill human rights,” emphasized HRW senior researcher Saadoun.
“The government must finally create a progressive tax structure and allocate its income to adequately support education and public services that benefit all Sri Lankans,” she concluded.
Point of View
It is evident that Sri Lanka's situation demands immediate attention. The intertwining of tax policies with the nation's economic health and public service funding illustrates a critical need for systemic reform. The government must prioritize equitable revenue generation to ensure that the rights of all citizens, especially in education, are upheld.
NationPress
15/10/2025
Frequently Asked Questions
What role did tax policies play in Sri Lanka's economic crisis?
Tax policies significantly contributed to Sri Lanka's economic crisis by reducing government revenue, leading to a default on debt and chronic underfunding of essential services, including education.
What are the recommendations from Human Rights Watch?
HRW recommends that the Sri Lankan government increase the education budget to the internationally agreed benchmark of 4 to 6 percent of GDP and implement a progressive tax system.
