Fuel taxes at around 40% in 2000 to 2017/18
Contrary to claims and counter-claims by all sides of Sri Lanka’s political spectrum, an analysis by the Business Times shows that during the 17-year (2000-2017) period, tax on petrol and diesel has averaged 40 per cent of the retail price of both fuels.
Fuel prices, year-on-year, have increased except for three instances: It was reduced by up to 4 per cent in 2009, by 6 per cent in December 2014 and, a month later (January 2015) by 22 per cent.
Even during the international oil price hike period of 2010 to 2014, where the barrel of oil shot up to a level of US$79.52 and $109.84, Sri Lanka’s taxes on petrol remained at a level between Rs. 24 and Rs.45.
The price of petrol varied from Rs. 115 to Rs. 162 and the average tax on fuel during the period was around 40 per cent.
Taxes on diesel varied from Rs. 12 to Rs.33, also reflecting around 40 per cent of the retail price.
In 2004 and 2005 fuel prices were not allowed to increase in spite of significant increases in international fuel prices.
This was similar to the earlier policy of providing government subsidies to recover operational losses of the CPC, one Treasury official disclosed.
Successive governments have followed a fuel pricing policy based on revenue generation without considering fluctuations in international oil prices and depreciation of the rupee.
Several indirect tax payments such as import duty, excise duty, stamp duty, value added tax, turnover tax and security levy on petrol and diesel have contributed immensely to the government revenue.
It also includes direct taxes such as income tax, dividends and other levies imposed on Ceylon Petroleum Corporation (CPC).
Inefficiency costs and overheads of the CPC during previous regimes have also compelled the governments to increase taxes on fuel as well as various other direct and indirect taxes, analysts said.
The price of fuel also depends on terminal costs at the Colombo port, CPC debt recovery charges, CPC wholesale costs and retail/distribution costs, they pointed out.