The Frontline Socialist Party (FSP), a breakaway faction from the Janatha Vimukthi Peramuna (JVP), has strongly criticized the National People’s Power (NPP) government’s 2025 Budget, accusing it of raising the tax burden on an ordinary family by Rs. 8,200 compared to the previous year.
At a press conference held at the FSP Headquarters in Nugegoda on Monday (25), the party’s Education Secretary, Pubudu Jayagoda, revealed that the average tax paid by each family will now amount to approximately Rs. 40,000 per year, up from Rs. 31,623 in 2024. He argued that this significant increase is a direct result of the 25.94% rise in taxes on goods and services.
According to Jayagoda, the total tax revenue from goods and services is expected to increase from Rs. 2,201 billion in 2024 to Rs. 2,772 billion in 2025. This means that the tax burden on the 5.8 million families across Sri Lanka will rise sharply, with each family paying an additional Rs. 8,200 annually in taxes.
Jayagoda further explained that the increase in taxes will make life more difficult for ordinary families. He cited the Department of Census and Statistics, which reported that the average monthly expenditure for a family is Rs. 78,000. With Rs. 40,000 of this amount now being taken up by taxes, Jayagoda raised concerns about how families would manage to meet their basic needs, such as purchasing medicine or sending children to school. He highlighted that the government had not removed VAT from essential items like educational and medical equipment, adding to the financial strain.
The FSP also criticized the government’s failure to address the issue of tax evasion by large corporations, which, according to Jayagoda, continue to benefit from significant tax relief. Jayagoda pointed out that while the government has imposed tax increases on small businesses and individuals, no efforts have been made to raise the 30% tax rate on large corporations. He explained that the tax burden on individual businesses has increased from 10% to 15%, and small partnerships now face a similar tax increase from 10% to 15%. Additionally, taxes on trustee funds and non-profit organizations have been tripled from 10% to 30%.
Jayagoda also highlighted the significant difference between the income tax revenue in 2024 and the expected income tax revenue in 2025, which stands at a mere Rs. 141 billion. He argued that this indicates the government is not actively working to recover the Rs. 1,068 billion in taxes that large corporations are estimated to have evaded in the past. Citing a report by the Parliamentary Procedures and Practices Committee, which revealed that large corporations had evaded Rs. 1,068 billion in taxes, Jayagoda expressed concern that the government had no clear plans to address this massive shortfall. In 2023, the government provided tax relief worth Rs. 978 billion to large corporations, a practice that the FSP believes should be reduced in order to provide relief to ordinary citizens.
Furthermore, Jayagoda questioned the government’s decision to raise the borrowing limit to Rs. 4,400 billion, despite the budget deficit standing at Rs. 2,200 billion. He argued that this increase in borrowing indicates that the government is expecting large corporations to continue evading taxes, further exacerbating the financial burden on the general public.
“The government’s approach is not focused on recovering lost tax revenue from the corporate sector. Instead, it is placing the entire burden on the small businesses and ordinary people,” Jayagoda said. He pointed out that while the budget for 2025 is billed as people-centric, it fails to deliver on this promise. “If the government truly believes in economic democracy, then it should involve the general public more in economic decision-making and ensure that the wealthy pay their fair share.”
Jayagoda concluded by urging the government to reconsider its policies, calling on them to focus on providing relief to ordinary people, particularly in light of rising living costs and tax burdens. He emphasized that the NPP government’s 2025 Budget, by increasing taxes on everyday items, was making life more difficult for Sri Lankan families, while allowing large corporations to continue evading taxes with impunity.
