Exploring the Dimensions and Determinants of Youth Tax Awareness in Sri Lanka

Abstract

Considering Sri Lanka’s urgent imperative to strengthen tax compliance and broaden its revenue base, this research aims to identify the key dimensions and determinants of youth tax awareness that promote voluntary compliance and ensure long-term fiscal sustainability. The study investigates tax awareness among the young in Sri Lanka through the development and validation of a multidimensional assessment framework, grounded in exploratory and confirmatory factor analysis, using a quantitative research approach. Drawing from a well balanced and demographically representative sample of 1705, the study identifies six core constructs Tax morale, Trust in government tax use, Procedural awareness, Legal awareness, Tax compliance motivation, and Taxpayer rights as critical dimensions of youth tax understanding. Findings reveal a pervasive lack of essential tax knowledge, particularly in areas concerning legal obligations and taxpayer rights, despite a generally positive disposition toward compliance. Procedural understanding showed moderate strength, yet widespread informational deficiencies and reliance on third-party assistance persist. The validated instrument demonstrates strong psychometric properties, offering a reliable and scalable tool for future research, policy evaluation, and cross-contextual application. While some indicators exhibited lower factor loadings, the overall model supports the conceptual integrity of the constructs. The study calls for early, structured, and youth-centred tax education integrated into formal curricula and supported by digital platforms and social media. Policy implications emphasize transparency, institutional trust-building, and the creation of accessible, inclusive communication and feedback channels. By addressing current gaps in legal literacy, procedural clarity, and civic engagement, the findings provide a strategic foundation for designing effective tax literacy programs and fostering a more informed and compliant generation of taxpayers in Sri Lanka and comparable settings.