ECONOMYNEXT – Sri Lanka’s President Maithripala Sirisena has ordered a 100 percent tax on big onion imports, as local farmers had problems selling their crops, a statement from his media office said.
"President Maithripala Sirisena directed to the Finance Ministry to impose 100 percent levy on imported big onions," the statement said.
The statement seems to indicate that the President has ordered ad valorem tax of 100 percent to be imposed on import moving away from the earlier practice of charging a special commodity levy.
According to available information there is a 40 rupee per kilogram special commodity levy on food onions. It is not clear whether the SCL will be doubled to 80 rupees a kilo.
The import tax represents the backwardness of Sri Lanka’s farmers and their efficiency. If tea farmers had a bumper harvest they will export more tea and earn cash from abroad.
But onions big produced in Sri Lanka cannot be exported as either their quality is low, they get rotten quickly or they cost too much due to import protection.
Big onion production was started in Sri Lanka in the 1990s as an ‘import substitution’ product to ‘save foreign exchange’.
Severe foreign exchange shortages hit Sri Lanka after 1951 due to the creation of a money printing central bank. (Colombo/Sept26/2017)