Sri Lanka to cut import duty on fish bait; two tier taxes
Mar 05, 2018 04:58 AM GMT+0530 | 0 Comment(s)
ECONOMYNXT - Sri Lanka, a country whose exports have been dampened by import taxes, will cut taxes on squid and milkfish in a bid to provide fish bait at rates competitive with the rest of the world.
Sri Lanka's long-line fishing fleet uses at estimated 7,000 metric tonnes of squid, milkfish and flying fish as bait, with about 3.000 metric tonnes coming from local sources, the Fisheries and Aquatic Resources Ministry has said.
The cabinet of ministers had approved cutting import taxes on squid and milkfish to make the long line fishery sector competitive.
But taxes will remain for squid and milk fish which are not imported for bait, as these items could also be used for consumption.
Authorities will 'take steps to prevent the release of fish imported as bait to the domestic market, the ministry had said.
Analysts also say the two-tier taxation will also encourage 'leaking' of tax-free fish bait, making leaking more profitable than actual fishing and encouraging fishermen and bait importers to engage in illegal acts or corruption.
Many of Sri Lanka's apparel factories made money 'leaking' duty free cloth imported for re-export until import taxes were slashed in the late 1990s ending corruption in the sector.
Sri Lanka's high taxes on inputs has been identified as a key reason for poor export diversification.
While established industries and foreign invested companies can import raw materials tax free, it not possible for start-up and innovators to do so, leading to a stagnant sector, where human ingenuity is blocked by state action. (Colombo/Mar06/2018)