Rajapaksa promises to cut Sri Lanka illiberal sugar tax

ECONOMYNEXT – Sri Lanka’s finance ministry has been instructed to cut an illiberal sugar tax, by which could reduce retail prices of sweetened drinks by almost 30 percent, a statement said.

The orders were given following a meeting of businesses making fruit and carbonated drinks and biscuits with disputed Prime Minister Mahinda Rajapaksa.

The statement said the finance ministry had been asked to relieve sweetened fruit drinks by up to 09 grams from the tax, and carbonated drinks by up to 06 grams.

The tax per gram had been instructed to be cut to 30 to 50 cents.

Rajapaksa does not have parliamentary support to change tax bills at the moment and has suffered multiple no-confidence motions, but some taxes can be changed by gazette outside the control of parliament.

Biscuit manufacturer had also complained that there were plans to slap a tax on them.
Taxes on food discourage consumption by acting on the poorest sections of society, which the rich is able to consume such foods.

The Sirisena-Wickremesinghe administration imposed the illiberal tax as a part of a range of illiberal economic policy underpinned by price controls, targeting the currency to depreciate it based on a real effective exchange index which backfired on the economy and the public. (Colombo/Nov30/2018)

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