Prices of essential commodities soar before 2021 Budget
Commodity traders and businessmen have jacked up prices of several essential food items despite a reduction in taxes on key commodities with the authorities being lax in instituting action. In anticipation of a hike in taxes in the November 17 Budget 2021, importers are also hoarding items.
The Special Commodity Levy (SCL) was reduced on some food items including canned fish, sugar, big (Bombay) onions and dhal (lentils) to the maximum possible level imposing Maximum Retail Prices (MRPs) for the benefit of consumers. In a gazette notification, the Finance Ministry slashed SCL on lentils, tinned fish and sugar to 25 cents from the earlier rate of Rs.5-10, Rs.100 and Rs.50 per kg.
Despite these reductions, prices of these commodities in the local market have increased with importers dominating in wholesale business making huge profits in the process, several small retail traders said.
They are holding on to large stocks of sugar, canned fish, big onions and lentils to sell it at high prices expecting a tax hike in the budget.
Sugar prices have been increased to Rs.120-130 per kg following the action of unscrupulous wholesale traders and some importers to hide their current stocks anticipating a tax hike in the upcoming budget.
The Consumer Affairs Authority fixed the maximum retail price for white sugar at Rs.100/kg for non-packaged and Rs.105/kg for packaged. The maximum retail price for wholesale sugar was fixed at Rs. 92/kg.
“The landed cost of sugar in Sri Lanka was between Rs. 85-90/kg (after tax reduction) so there was still a profit margin to be made with the maximum retail price in place,” a trader said.
Sugar importer are said to have imported a large stock of 8000 tons by paying the commodity levy of 25 cents aimed at making a huge profit by selling some of it at high prices and hiding most of it expecting a tax hike, market sources revealed.