The tax package, including the new tax rate schedule for personal income tax, is in line with international comparison, defending the government's new tax structure, the IMF staff mission for Sri Lanka said.
In response to recent media reports about tax hikes in the country, the staff mission said in a statement that those who can most afford it need to make contributions to the financing of the necessary government expenditures.
Peter Breuer, Senior Mission Chief for Sri Lanka, and Masahiro Nozaki, Mission Chief for Sri Lanka, however, noted that efforts to increase tax revenues should be pursued while protecting the poor and most vulnerable.
"Only with appropriate tax receipts will the Government will be able to fund essential expenditures and avoid further slashing of critically important outlays. These reforms will also help regain the confidence of creditors," the mission said.
"Sri Lanka is among the countries to collect the least amount of fiscal revenue in the world, with tax revenue to GDP ratio at only 7.
3 per cent in 2021. External creditors are not willing to provide financing to fill this gap."