Sri Lanka not to double tinned fish tax to further protect four businesses
ECONOMYNEXT – Sri Lanka’s 50 rupees a kilo tax imported tinned fish slapped by the state to protect four domestic big businesses from the poor, will not be increased again and is expected to remain at current levels.
The fish canning factories have been gouging customers selling tinned fish at higher-than-world-market prices in collusion with the political establishment who have slapped an import tax, for several years.
An import tax ‘protects’ a domestic business by making foods unaffordable to the poorest customers while relatively more affluent customers will continue to purchase the goods paying the higher tax.
In January the newly elected administration cut the tax from 100 rupees to 50 rupees.
Last week the cabinet approved a proposal from the fisheries minister to license the four companies employing 150 people to import fresh mackerel from abroad tax free, and a minister said the import tax would also be raised to protect the factories.
Finance Minister Ravi Karunanayake told reporters Friday that the import tax on canned fish will not be raised.
In Sri Lanka small fresh fish like Mackerel enjoy a ready market and can be easily sold as many people are poor and not everyone can afford large fish.
Fresh fish can also be distributed country-wide fairly quickly as Sri Lanka is a small island. As a result it is not necessary to can fish caught domestically.
Sri Lanka has also slapped an import tax on fresh fish to ‘protect’ fishermen from the hungry.
Raising the tax would have given the canning factories the privilege of importing mackerel tax free and also pushed up domestic prices, allowing the factories to collect more than 50 rupees a kilo in taxes it was arbitraging now. Import subsitution domestic businesses, have a made a case to gouge customers with high prices with tax protection, claiming that they are ‘saving foreign exchange’. (Colombo/Jan30/2016)