At a press conference regarding the third review of Sri Lanka’s Extended Fund Facility from the International Monetary Fund (IMF), Sri Lanka Representative Peter Brewer highlighted the need for a property tax to ensure long-term economic stability.
A property tax is a progressive tax imposed on the wealth of property owners, commonly practiced in many countries worldwide. Experts suggest that such a tax would encourage wealthy individuals to invest excess wealth rather than spending it on luxury properties such as mansions. Additionally, it could help regulate the acquisition of property using illicitly earned funds.
The IMF had initially projected that the property tax would generate government revenue of Rs. 411 billion in 2025, Rs. 447 billion in 2026, Rs. 485 billion in 2027, and Rs. 526 billion in 2028. However, the government informed the IMF of potential difficulties in assessing the value of wealthy individuals’ properties. As a result, the property tax proposal was withdrawn during the third review held in June 2024.
Professor Wasantha Athukorala of the Department of Economics at the University of Peradeniya pointed out that the top 20% of income earners in Sri Lanka currently hold 21.3% of the country’s total income.
