Excess spending, coupled with insufficient taxation, spells inflation and leads to recession
Dwindling tax base and shrinking tax revenue in Sri Lanka
Too much spending by the Government, accompanied by too little taxation, will cause inflation, which can lead to recession.
Sri Lanka, a country with 20.2 million people, has income tax payers of 897,000 persons. This figure includes 530,000 people paying taxes through the pay as you earn (PAYE) scheme and 367,000 others.