Editor’s note: The following article is based on an open letter addressed to the President of Sri Lanka by a concerned citizen. A copy of the same letter was received by the Sri Lanka Guardian. The text reflects the arguments, data and proposals contained in that letter, presented here in extended analytical form.
A devastating cyclone has pushed more than two million people into distress, creating an immediate need for vast financial resources to support relief, reconstruction and economic stabilisation. At the same time, the postponement of a proposed property tax has exposed the deep political and administrative difficulty of reforming a fiscal system that is no longer capable of meeting the country’s needs. These two developments are not portrayed as unrelated misfortunes but as interconnected manifestations of a deeper structural failure. The letter argues that Sri Lanka’s tax regime punishes production, rewards evasion and consistently fails to mobilise sufficient revenue for either crisis response or long-term development. In this context, raising existing taxes such as VAT or income tax is presented as a counterproductive response that would intensify inflationary pressure, suppress consumption and push more households into poverty.
Against this bleak backdrop, the letter advances a proposal that is deliberately radical in scope and intent: the introduction of a Single National Asset Tax. This proposal is framed not as a marginal reform but as a complete reorientation of the fiscal state. Its stated objective is twofold. First, it aims to generate immediate and substantial revenue to fund disaster recovery without relying on debt or inflation. Second, it seeks to permanently dismantle the existing tax structure and replace it with a system that encourages investment, restores purchasing power and unleashes economic growth. The proposal is unapologetically ambitious, claiming that a single, well-designed asset-based levy could both double government revenue and allow for the abolition of most other major taxes.
The argument begins with a detailed examination of Sri Lanka’s current revenue base, which is described as shockingly narrow given the scale of national wealth. Official figures show that all local authority rates and property taxes combined generated only LKR 45.3 billion in 2022, while motor vehicle licence fees contributed a further LKR 29.4 billion. Together, these two sources amounted to approximately LKR 75 billion, representing just over two per cent of total government revenue. This is presented as evidence that the state has largely ignored the country’s primary store of wealth: land, buildings and high-value assets. Instead, fiscal policy has focused on taxing income and consumption, which are easier to conceal, easier to evade and far more damaging to economic vitality.
The letter argues that this imbalance is not merely inefficient but fundamentally unjust. It penalises those who earn wages, operate businesses or consume basic goods, while leaving vast concentrations of wealth largely untouched. The Single National Asset Tax seeks to reverse this logic by building directly on the existing property and vehicle tax base. Rather than introducing new valuations, new bureaucracies or complex assessment mechanisms, the proposal relies on a simple multiplier applied to what already exists. By applying a one-hundredfold multiplier to the current LKR 75 billion base, the state would generate LKR 7.5 trillion in annual revenue. This figure alone exceeds current total government revenue, which stands at approximately LKR 5 trillion.
The scale of this proposed revenue increase is central to the argument. The letter highlights that cyclone relief and reconstruction are estimated to require around LKR 600 billion, while the broader economic damage is estimated at LKR 2 trillion. Under the proposed system, these needs could be met immediately, without recourse to additional borrowing or emergency taxation. Beyond disaster response, the surplus revenue could be used to fund development over a ten-year horizon, stabilise public finances and restore confidence in the state’s capacity to govern effectively.
A crucial pillar of the proposal is its grounding in the actual distribution of wealth within Sri Lankan society. The letter outlines a stark socio-economic reality. The poorest sixty to seventy per cent of the population hold less than five per cent of national wealth. A middle segment, comprising roughly twenty to twenty-eight per cent of citizens, controls around twenty-five to thirty per cent. At the top sits a narrow group of approximately seven per cent of the population, holding between sixty-five and seventy per cent of the nation’s wealth, primarily in real estate and business assets. The conclusion drawn from this distribution is unavoidable: any serious attempt to raise revenue fairly and efficiently must focus on asset wealth rather than income or consumption.
The existing tax system, the letter argues, does precisely the opposite. It taxes income, which can be hidden, deferred or shifted, and consumption, which falls disproportionately on the poor. By contrast, assets such as land and buildings are visible, immovable and difficult to conceal. The Single National Asset Tax therefore targets the segment of society most capable of contributing, while leaving the majority of citizens either untouched or positively affected through lower prices and higher real incomes.
The proposal does not stop at revenue generation. It explicitly links the introduction of the SNAT to the abolition of a wide range of existing taxes that are described as strangling the economy. These include corporate income tax, personal income tax, value added tax, capital gains tax and tax on interest income. Each of these is portrayed as imposing hidden costs on ordinary citizens. Corporate taxes are passed on to consumers through higher prices. Income tax encourages skilled workers to leave the country. VAT drives cascading inflation across the economy. Capital gains tax discourages productive asset transfers, while tax on interest income keeps lending rates high and restricts access to capital.
According to the letter, removing these taxes would have an immediate and dramatic impact on the cost of living. Prices would fall sharply as embedded taxes disappear from supply chains, effectively doubling the purchasing power of the most vulnerable households within months. Goods that currently cost one hundred rupees could, in this scenario, fall to fifty rupees. Government expenditure would also decline as procurement costs fall, further easing fiscal pressure. The SNAT is thus presented as a mechanism that shifts the burden of taxation away from daily economic activity and towards accumulated wealth, with transformative effects on both demand and supply.
Considerable attention is given to the design of the proposed tax, with an emphasis on fairness, stability and administrative simplicity. The SNAT would apply annually to two asset classes that are considered impossible to hide: immovable property and luxury vehicles such as cars and SUVs. Crucially, the proposal includes explicit protections for the less privileged. Properties with a 2024 local council tax bill of LKR 2,500 or less, corresponding roughly to properties valued at around LKR 1 million, would be fully exempt. Motorcycles and three-wheelers, which are essential for livelihoods and transport among lower-income groups, would also be exempt.
To ensure predictability and prevent abuse, the proposal fixes the base year for assessment at 2024. The local council tax bill for that year would serve as the reference point for the next ten years, with the SNAT calculated simply as that bill multiplied by one hundred. This approach eliminates the need for new valuations or discretionary adjustments, reducing opportunities for corruption and administrative delay. Local authorities would retain the freedom to set their own rates for local services, preserving decentralised governance while separating local finance from national revenue needs.
An illustrative example is provided to demonstrate how the system would operate in practice. A senior banker living in a Colombo property valued at LKR 80 million, with a rental value of approximately LKR 100,000 per month, paid a local council tax of LKR 3,500 in 2024. Under the SNAT, his annual liability would be LKR 350,000, or around LKR 29,000 per month. This amount is less than thirty per cent of a single month’s rental value and significantly lower than his current income tax burden. In a tax-free income environment, his capacity to earn, invest and consume would increase, making the contribution both manageable and proportionate.
The letter goes on to outline the broader economic effects expected within a six-month horizon of implementation. The removal of embedded taxes would sharply reduce production costs and reliance on bank borrowing, making Sri Lankan exports instantly more competitive. Tourism, manufacturing and foreign direct investment would benefit from a lower cost base, positioning the country as an attractive destination in the region. A surge in revenue and investment would strengthen the currency, reducing the cost of imports such as food and fuel and further easing inflationary pressures.
The abolition of corporate tax is expected to open investment floodgates, transforming Sri Lanka into a regional hub for capital. The removal of personal income tax would reverse the brain drain by giving professionals strong incentives to build their futures domestically. Rising real incomes and job creation would lift millions out of poverty within a year, according to the letter’s projections. The elimination of tax on interest income would drive lending rates down to an estimated three to five per cent, making capital accessible to entrepreneurs, small businesses and households on an unprecedented scale.
To reinforce its credibility, the proposal is situated within a global context. Estonia is cited as a successful example of a growth-oriented tax system that taxes corporate profits only when they are distributed, not when they are reinvested. This approach has earned Estonia a reputation as one of the most efficient and competitive tax systems in the world, consistently ranked at the top by international assessments. The Single National Asset Tax is presented as an extension of this logic, applied not only to corporations but to the entire economy, prioritising reinvestment, growth and long-term prosperity over short-term extraction.
The traditional path of incremental tax increases and austerity measures is described as a route to higher inflation, deeper poverty and greater social division. By contrast, the SNAT is offered as a path towards unity, recovery and shared prosperity. It aligns the interests of the wealthy with national reconstruction, provides the state with abundant and stable revenue, and liberates citizens from a complex and punitive tax regime. The cyclone is portrayed as a moment of painful clarity, exposing long-standing vulnerabilities. The response, the letter urges, should not merely rebuild what was lost, but reimagine the foundations of the Sri Lankan economy and fiscal state for a more just and abundant future.
