Sri Lanka, July 24 -- Tax collections in Sri Lanka surged by 49 percent in the first quarter of 2026 compared to the same period last year under the latest Extended Fund Facility programme.

Meanwhile, gross domestic product grew by 5.1 percent alongside inflation remaining below 2.5 percent.

However, an underlying economic threat expands as state tax revenues grow significantly faster than broader economic performance.

Absorbing an increasingly larger portion of economic value creation, state tax expansion risks driving gradual output decline.

The Tax Buoyancy Ratio measures this relationship by comparing tax revenue growth against overall economic expansion. While global policies aim for a ratio slightly above one to balance revenue ...