I can see many Sri Lankans are upset about the new income tax. If you think logically, it is a long overdue and incredible move by the SL government. This will help the poor and the middle class in the long run. Direct taxes like income taxes are calculated based on your capacity to pay. The direct tax is progressive because the government knows who they are taking from and who earns how much. An indirect tax is a blanket tax levied on the consumption of goods/services. Indirect taxes like VAT and excise are by their very nature regressive because they are a point of sale tax. You don't know who uses how much. In this case, poor and middle-class people spend more of their wealth or income on taxable goods and services than rich people.
SL tax policy has always been unprecedentedly one-sided. Economists say that to maintain a fair society, 40% of tax revenue should come from indirect tax and 60% from direct tax. However, in Sri Lanka, indirect taxes account for nearly 82% of total tax revenue. By increasing the percentage of tax income from direct taxes, Sri Lanka can finally reduce taxes on goods and services. This will make consumables affordable for the poor and middle class in the long run. People are angry because they now know the government takes money directly from their pockets. It won't matter to them if it takes it indirectly through higher taxes on goods and services. A major defect of democracy is that governments are compelled to appease people in order to win votes rather than doing what is right. That is one of the reasons why we are a failed state in the first place. So I see this as a very progressive move that will lead to a fairer society.
PS: I'm not an expert on macroeconomics, so I'm open to any counterarguments😊
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