Sri Lanka hikes import duties, credit card levy on payments
ECONOMYNEXT – Sri Lanka has raised import duties across the board and also hiked a tax on credit card payments abroad, worsening trade barriers and regressive taxation, while widening an income tax threshold on employment income.
Finance Minister Ravi Karunanayake raised the highest import tax band from 25 percent to 30 percent, undermining claims to have a social market economy.
A 7.5 percent band would end and items that are not taxed at zero now would be taxed at 15 percent. Karunanayake did not specify that the 7.5 percent band would be made zero. If not, all items now taxed at 7.5 percent would be taxed at 15 percent in the future.
Though many items are free from ‘import duty’ based on value, a large number of traded goods are taxed through a cess, special commodity levy or an excise duty.
The Ports and Airport Levy, another indirect import duty on trade will be raised from 5 to 7.5 percent.
In another state intervention, duty on construction, agriculture and dairy industries would be exempted.
The construction industry have powerful businesses and importers of construction equipment with financial and lobbying clout.
Taxes on the import of fish was also raised by 50 rupees a kilo to ‘protect the local industry’, undermining claims to operate a social market economy and instead moving closer to the Nazi autarky that existed in Germany until the social market economy was created.
The social market economy, which ended price controls, made the war torn nation grow faster than the winning nations like Britain, which practiced expropriation, money printing, currency depreciation and rationing.
Raising trade barriers to individuals even further, the budget raised a tax on payments by credit to foreign parties to 2.5 percent, but abolished a 1.5 percent tax for domestic trade.
Sri Lanka’s rulers and do not understand that a country may export and import the same item and there are types of fish available in one country that is not available in another.
In free countries the elected ruling class and nationalists have been forced to give these freedoms to the people, increasing prosperity and choice, by citizens who realized that the ‘nationalist and sozialpolitic’ policies that led to Nazism and fascism were detrimental to the people.
However in a move towards a social market economy, the budget proposed the cutting of import taxes on shoes, electrical items and garments.
Import duties on shoes have created a near monopoly and also made poor school children pay high prices for shoes, and some go to school barefoot and cutting taxes move would further a social market economy.