Sri Lanka hikes food tax on onions by midnight gazette

ECONOMYNEXT – Sri Lanka has raised an existing food import tax on large onions to Rs40 a kilogram from Rs25 to keep domestic prices high to give profits to producers, with a price control also imposed at Rs78 rupees a kilo, the finance ministry said.

Levies on foods and other items are routinely hatched in secret in Sri Lanka by bureaucrats and ministers, and slapped by midnight gazette to help special interests lobbies, literally, while the citizenry is sleeping in a brazen act of prerogative taxation without parliamentary or even cabinet sanction.

The parliament then rubber-stamps the levies later in a grotesque parody of the basic democratic principle of ‘taxation by consent’, critics say.

This year, some groups had challenged the practice of imposing VAT by minister’s prerogative in Supreme Court, and the current administration was forced to backtrack and treat people in a less feudal manner.

The finance ministry revealed the onion levy in a statement on August 21, saying that the tax had come into effect from the midnight of August 19.

The finance ministry said 12,000 tonnes of large onions (Bombay onions) are imported every month and domestic farmers are expected to harvest about 50,000 tonnes in the next few months.

The tax was raised to ‘protect’ the farmers.

Unlike farmers in other South Asian countries, Sri Lanka’s onion, potato or rice famers cannot produce food either to the quality or price demanded in export markets, and what would be an exportable surplus (earning foreign exchange) in India or Pakistan is simply a phenomenon to that pushes up food costs for the hungry. (Colombo/Aug21/2016)

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