By Harsha de Silva –

Dr. Harsha de Silva MP

In my detailed response to the 2026 budget speech, I exposed a government that has not only failed to deliver on its core election promises but has presented a budget that is a betrayal of the very people who voted for it.

While I acknowledge the government has maintained the macro-economic stabilization achieved by the previous administration, I must challenge its complete lack of any plan for economic growth. This budget is not a “system change”; it is “the same old thing” wrapped in a new flag.

1. The “1 Trillion Rupee” Deception: Hiding a Surplus While Taxing the Poor

* A Massive Windfall: I revealed that the Treasury is “overflowing” with an unexpected cash surplus of approximately 1 trillion rupees. This windfall came from massive vehicle import taxes (over $1.4 billion worth imported), which the government did not anticipate.

* No Relief, Only More Taxes: Instead of using this 1 trillion rupee surplus to provide relief, the government is increasing the tax burden. They have widened the VAT net by lowering the threshold from 5 million to 3.6 million rupees per month (a mere 100,000 rupees a day), hitting small businesses directly.

* A New Property Tax: I also warned that this government has secretly agreed to implement a new, wide-ranging property tax, which will be rolled out in the first quarter of 2027.

2. A “Joke” Housing Plan: 1 Million Rupees for a 100-sq-ft House

* The housing promises are a cruel joke. The budget allocates 10.2 billion rupees to build 7,000 houses. My calculation shows this is 1 million rupees per house.

* With construction costs at 10,000 rupees per square foot, this 1 million rupee allocation is only enough to build a 100-square-foot structure.

* This is not a home; it is an insult.

3. The “416 Worker” Loan: Another “Joke” for State Employees

* The government’s “concessional” housing loan for state workers is equally absurd. They allocated only 500 million rupees for the entire program.

* With 1.4 million state workers, this tiny allocation is only enough for 416 employees. This is not a policy; it’s a lottery.

* The real problem, which they ignore, is the crippling taxes on building materials: 49% on cement, 60% on bathroom fittings, and 92% on PVC pipes.

4. No “System Change”: Borrowing 3.8 Trillion Rupees

* This budget proves there is no “system change.” The very people who criticized borrowing now plan to borrow a staggering 3.8 trillion rupees in 2026 (3,110 billion domestic and 700 billion foreign).

* They are taking credit for stabilization achieved by the previous government—when inflation fell from 17% to 1% and the USD from 370 to 294. Now, under their watch, the rupee is depreciating again, hitting 307.

5. Betrayal of the Youth and SMEs

This budget fails the “five simple dreams” of the youth who voted for them.

* Jobs: Promised state sector jobs are indefinitely postponed.

* Tax Relief: The promise to increase the tax-free income threshold to 200,000 rupees was broken.

* Freelancers: Instead of removing barriers, online freelancers, who previously paid 0%, were slapped with a new 15% tax.

* SMEs: The promised “Relief Bank” (සහන බැංකුව) for struggling SMEs has not materialized, and the “rice mafia” is stronger than ever, squeezing out small millers.

6. Disingenuous FDI Claims and Exporter Crisis

* The government’s claims of $823 million in new Foreign Direct Investment (FDI) are disingenuous. I showed that over 54% of this figure comes from old projects signed by previous governments, including the Adani Port ($229 million).

* Our exporters, the lifeblood of our economy, are in crisis. The removal of SVAT has created a severe cash-flow problem, as the promised 45-day refund system is not working.

* There was also complete silence on crucial trade deals like RCEP and ECTA, proving they have “no political will to walk the talk.”

7. Ongoing Corruption and Neglect of the Elderly

* While I support the anti-corruption talk, I pointed to new procurement irregularities, such as a tender for 1,775 double-cabs where the mandatory bid period was allegedly and improperly cut from 42 days to just 12.

* Finally, the budget fails our senior citizens. There is no progress on a pension for the non-formal sector. Worse, I allege the government secretly agreed with the IMF to stop the interest subsidy for senior citizens’ fixed deposits by the end of this year—a crucial fact omitted from the budget speech.

In conclusion, my analysis positioned this 2026 budget not as a vehicle for change, but as a document of broken promises. It fails to address the real needs of the youth, the elderly, and the nation’s key economic drivers.