Minister Gunawardena: right numbers but wrong conclusions on tax burden

Fact Check

In his statement, the minister makes two claims: 

1. On the numbers: Tax revenues increased from Rs. 1,050 billion in 2014 to Rs. 1,700 billion under the yahapaalanaya government, and that the incumbent administration reduced taxes by Rs. 520 billion. 

1. The conclusions: The tax collection under the previous government was (a) an excessive burden, and (b) even higher than during the war.  

To check the first claim, FactCheck.lk consulted the Annual Report of the Ministry of Finance for 2020. In 2014, tax revenue was Rs. 1,050 billion as claimed by the minister. During the 2015-2019 tenure of the yahapaalanaya government, tax revenue peaked at Rs. 1,735 billion in 2019, which aligns closely with the minister’s stated figure. By 2020, tax revenue had declined to Rs. 1,217 billion, a decline of Rs. 518 billion, which is also in line with the minister’s claim.  

To evaluate the second claim, FactCheck.lk considered tax revenue as a percentage of the GDP to assess the magnitude of taxes over time. Between 1983 and 2009 (during the war) the lowest tax revenue to GDP ratio was 12.7% recorded in 2003. In this period, tax revenue to GDP reached its peak at 19.5% in 1985. During the yahapaalanaya government tax revenue to GDP peaked at 12.5% in 2017.  

The highest tax revenue to GDP recorded during the yahapaalanaya government (12.5%) was lower than the lowest tax revenue to GDP recorded during the war (i.e., 12.7% in 2003). In 2019, tax revenue to GDP was 11.6%, which was already in the lowest quintile among tax revenue to GDP ratios globally, and therefore not excessive by global standards. The minister’s second claim is not supported by the data. 

Therefore, we classify the minister’s claim as Partly True.   

Additional note: PublicFinance.lk, a platform run by Verité Research, provides a snapshot of Sri Lanka’s tax to GDP ratio overtime and how it compares to other countries. See more details at http://bitly.ws/fTpT.  

*FactCheck.lk’s verdict is based on the most recent information that is publicly accessible. As with every fact check, if new information becomes available, FactCheck.lk will revisit the assessment.