Policy Proposals for the 2026 Budget: Advocata Institute’s Call for Reform

Policy Proposals for the 2026 Budget: Advocata Institute’s Call for Reform

The Advocata Institute’s comprehensive policy proposals for the 2026 Budget outline a critical reform agenda aimed at enhancing fiscal sustainability, fostering competition, and driving inclusive economic growth.

These proposals address systemic issues across key sectors, advocating for modernization and performance-based governance:

1. Tax Reform in the Port City: Advocata recommends replacing the existing generous Corporate Income Tax (CIT) and Personal Income Tax (PIT) exemptions offered to Port City Business Entities and employees with Tax Credits. This shift utilizes tax credits as a targeted, performance-based tool, tying incentives directly to measurable outcomes such as verifiable job creation and capital commitment, thereby attracting investment while protecting essential public revenue.

2. Accelerating Land Titling (Bim Saviya): The report calls for the acceleration and reform of the Bim Saviya program, which has stagnated for 25 years. Accelerating this process—which converts the deed-based system into a state-guaranteed title system—is essential to unlock billions in “dead capital” and strengthen governance. Clear titles are crucial, as secure property rights underpin investment and could increase access to finance by 25–30 percent in comparable economies.

3. Phasing Out Para-Tariffs: To dismantle protectionist barriers and enhance competition in tradable sectors, Advocata urges the government to accelerate the phased elimination of para-tariffs, specifically the Cess and the Port and Airport Levy (PAL). This reform is crucial for promoting efficiency, reducing trade costs, and re-establishing the economy’s connection to global markets.

4. Modernizing Social Security: A three-pillar reform strategy is proposed to transform Sri Lanka’s outdated and fiscally unsustainable social protection system. Key steps include: transforming the EPF into a competitive, multi-fund superannuation model; introducing a contributory pension scheme for public sector employees; and establishing a joint contributory Unemployment Insurance Fund to provide a safety net for workers.

5. Enacting Plant Variety Protection: To address the stagnation in agricultural productivity, the Institute recommends drafting and enacting a Plant Variety Protection Act (breeder rights legislation). This intellectual property protection would incentivize the private sector to recover research costs and develop urgently needed productive and climate-resilient seed varieties