Soaring essential commodity prices hit consumers amid tax cuts
File picture of a vegetable market
Consumers are badly affected by the rise in prices of essential commodities specially sugar, dhal and big onions despite the government’s efforts to provide them some relief by reducing taxes drastically, consumer protection societies said.
The Finance Ministry has extended special commodity levy (SCL) of 25 cents per kilo on sugar, dhal and big onions for another six months commencing from April 14 for the second time since its initial enforcement in October 13, 2020.
Prime Minister Mahinda Rajapaksa as the Minister of Finance has issued the relevant gazette notification extending the special commodity levy on sugar, dhal and big onions imports despite the alleged massive revenue loss of billions of rupees to government coffers.
However a senior Treasury official was of the view that there is no such thing as revenue loss in a tax deduction scenario and those levies had been deliberately lowered to bring prices down.
The government has the right to change the tax rates for the benefit of the public, he said adding that the commodity levy of 25 cents on those essential items has been extended due to some legal issues.
A report submitted to the Committee on Public Accounts, by the Ministry of Finance in March this year revealed that the SCL reduction to 25 cents on sugar had cost the government a staggering revenue loss of Rs. 15.9 billion.
However in order to bring down prices, the Ministry of Trade has to issue a special gazette notification via the Consumer Affairs Authority (CAA) following the proper procedure to enforce Maximum Retail Price of those commodities.
This new gazette notification is essential at present as the traders ignored all previous gazettes and sold those commodities at prices much higher than the control price.
However Sri Lankan essential commodity importers and traders said that they cannot sell essential food items such as sugar, dhal, and big onions at controlled prices which is yet to be announced by the government.
A spokesman of the Essential Commodity Importers and Traders Association noted that the importers have to pay high prices for their imports of essential commodities as they have to place orders in advance to continue their supply amidst world market price fluctuations.
He noted that they cannot sell it at the government’s fixed price amidst fluctuations in world market prices and the depreciation of the rupee against the US dollar.
Sri Lanka is importing dhal from Canada and white sugar from India and the prices of those commodities have been rising at present.
He revealed that wholesale dealers had to process and store large stocks of imported dhal and their total cost has shot up to over Rs.200 per kg as result of high import prices, taxes, depreciation of the rupee and the cost of processing.
All these problems in the implementation of MRP have cropped up because of arbitrary action taken by the Trade Ministry and CAA without any consultation with the relevant stakeholders, he added.