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CAA on prowl to check if traders pass on tax cuts
In an attempt to ease the sky-rocketing cost of living, the Consumer Affairs Authority (CAA) is investigating the prices of 23,000 products to make sure they reflect recent VAT reductions.
This week, vegetable prices decreased slightly from last week but remained high compared to last year’s February prices. Pix by Indika Handuwala
VAT (Value Added Tax) was reduced from 15 per cent to 8 per cent from December 1 last year. The 2 per cent Nation Building Tax (NBT) on domestic goods and services was also eliminated.
The CAA’s Deputy Director (Pricing and Management), Rohan Meewanage, told The Sunday Times the authority contacted 250 companies whose products should be reduced.
“We conducted a survey and found only a few items had been reduced. Then we reached out to the 250 companies and requested them to submit their price list prior to the VAT concession and after. Only 160 of them have submitted such lists,” he said.
The companies include those importing and producing milk powder and other dairy products, processed meat, condiments and spreads such as jams, food items such as pasta and noodles, baby care items, beverages, detergents etc.
“We are looking into the items to see whether the full VAT concession and NBT deduction are included,” Mr. Meewanage said, adding, “Inspections are being carried out in supermarkets and retail shops.”
Among the top excuses offered by companies for hanging on to higher prices were price increases in raw materials and selling off existing stock, he said. The CAA was conducting individual investigations to make sure the full concessions were passed to the public.
The authority was also visiting hotels to see whether prices have been reduced after the tax benefits.
Inland Revenue Department Commissioner-General Nadun Guruge told The Sunday Timesthe public had not benefited from the tax benefits given to bakeries and hotels.
Chandra Collure
“The bakery association accepted the fact that they have not implemented the tax benefits but they said this was due to increased expenses they have to face during the manufacturing process,” he said.
“It’s unfair that the traders are not ready to reduce prices when the government has implemented such benefits for the public but they are very quick to increase prices during an increment of taxes,” Mr. Guruge said.
There is rising concern, meanwhile, about price increases in vegetables and other food items.
“When vegetable prices increase, the price of coconuts comes down and vice versa, or the price of fish, dry rations, prepared food and bakery items increase. We have had no relief from the tax deductions,” said housewife Chandra Collure, from Kotte, two months after the government introduced its tax bonanzas aiming at reducing the cost of living.
Her voice is echoed by many who are struggling with the cost of living. This week, vegetable prices decreased slightly from last week but remained high compared to last year’s February prices.
According to Census and Statistics Department’s weekly average retail price list, pumpkin, which was sold at Rs. 92 a kilo is now Rs. 263. Bitter gourd, sold for Rs. 195 a kilo last February, is Rs. 265. Snake gourd is Rs. 225 compared to last year’s Rs. 141.
Coconuts are sold between Rs. 60-90. Green beans increased from last year’s Rs. 157 to Rs. 341 last week. A kilo of beetroot is Rs. 200-400 this week and last February was Rs. 135.
Although carrot prices decreased slightly this week from Rs. 503 to Rs. 412, this is still at high compared to last year February’s Rs. 157 per kilo. Long beans, Rs. 142 last year, are now Rs. 256.
S.T. Nihal has been selling vegetables in the Nugegoda market for almost three decades. “People are buying handfuls of vegetables because they can’t afford to spend a lot on vegetables alone,” he said.
“Price increases and low supply are affecting our businesses. People are going for cheaper vegetable alternatives such as kos and polos (tender jackfruit),” he added.
A kilo of tomatoes that was Rs. 112 last February, sold for Rs. 446 this week. Garlic is Rs. 567 a kilo, almost double last February’s price. The price of red onions remains very high at Rs. 531 a kilo compared to Rs. 177 this time last year.
Dried chillies was Rs. 333 a kilo last year and sold at Rs. 629 this week. Meanwhile, a shortage of local fruit in the market has led to price increase in fruits as well.
“I frequently travel to the Badulla, Welimada and Bandarawela areas and know that vegetable farmers are battered by weather extremes and middlemen who make big profits. The authorities are yet to come up with an agriculture policy and a programme to provide relief to both farmers and consumers,” said Mrs. Collure.
Sujith Weeragalle runs a food outlet that prepares and sells lunch packets, bakery goods and tea.
“The price of coconuts and vegetables vary in shops – there is no standard price. If prices keep increasing we shall be compelled to increase our prices,” he said.
The CAA’s Mr. Meewanage said price hikes due to low supply of vegetables and agriculture products cannot be controlled by the CAA, but he promised the authority would look into complaints against fraudulent traders.