ECONOMYNEXT – Sri Lanka must immediately impose an excess profit tax to recover the Rs 15.9 billion loss in tax revenue from the alleged ‘sugar scam’, the United National Party (UNP) said today.
“With the introduction of this new tax, the consumers will not be burdened as prices of goods will not be increased. The suppliers will also not be unduly taxed as this will be levied against the excess profits they have earned,” former UNP MP Prof Ashu Marasinghe told reporters this afternoon.
Sri Lanka’s current administration is under fire after sugar taxes were cut to 25 cents from 50 rupees a kilo when one trader in particular had allegedly imported unusually large volumes of sugar and sold them far above the cleared price, arbitraging the taxes. Opposition MPs have charged that some of the stock had also been dumped on state-run Lanka Sathosa above the cleared price, in the style of the bonds bought at low prices that were allegedly dumped on the Employees Provident Fund (EPF).
However, Treasury Secretary S R Attygalle last week declined to call the Rs 15.9 billion a ‘loss’, opting instead to call it foregone earnings. Large tax changes had been made overnight through gazette in the past as well, Attygalle told reporters in Colombo.
Speaking to reporters at UNP headquarters Sirikotha today, former MP Marasinghe said that, with the financial year ending March 31, it is essential that the government immediately introduce the excess profit tax proposed by the UNP to ensure the largescale loss would not go unsolved.
“Those involved in this sugar scam have close dealings with the current president and government. If the government is unwilling to recover the lost revenue from this company, it will clearly demonstrate to the public that they are protecting those who supported them at the cost of the general public. The government is facing a mounting debt crisis and a reduced revenue stream due to the economic mismanagement, a loss of this magnitude will only further weaken confidence in the Government’s economic policies,” he said.
Professor Marasinghe also urged the government to immediately appoint an independent commission to inquire into Sathosa’s purchase and sale of sugar.
“According to the Finance Ministry, Sathosa purchased sugar following the tax reduction at prices varying between Rs 127 and Rs 92 per kilo. However, they sold sugar at the government enforced maximum retail price of Rs 85 per kg. The losses incurred by Sathosa must be investigated,” he added. (Colombo/Mar15/2021)