Government raises palm oil tax to protect coconut industry
In a short term strategy to maintain stable domestic coconut prices, the Finance Ministry has increased the Special Commodity Levy (SCL) for palm oil by Rs.20 to Rs. 175 recently, official sources said.
Palm oil imports increased by 41 per cent YoY to 89,959 metric tons as a result of bringing down the SCL previously, Finance Ministry data revealed.
The move is aimed at protecting the local coconut industry a senior Treasury official said adding that several desiccated and oil mills in the country had to stop production due to the high prices of coconuts.
A palm oil import racket that has been carried out for several years was exposed recently and the government’s move will also help the custom authorities in combating this malpractice, he said.
Some unscrupulous importers have been importing unrefined palm oil but actually mixing crude oil with the palm oil in order to obtain a tax rebate.
The country has been deprived of millions of rupees in tax money annually by this malpractice, he said noting that this loophole has now been closed.
Though the retail prices of a coconut were around Rs. 60 a nut in August down from Rs. 85 in January this year, it was still too costly for coconut oil mills which had reduced production.
The decline in coconut oil production has resulted in more palm oil imports which are a substitute for coconut oil.