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Sri Lanka should cut high food taxes to reduce malnutrition: science minister
08 Nov, 2012 07:19:14
Nov 08, 2012 (LBO) - Sri Lanka should cut high food taxes which will make proteins more accessible to the poor and reduce malnutrition among small children, science and technology minister Tissa Vitharana has said.
"I looked into this question of nutrition, and there is evidence that there is some increase of acute mal-nutrition, really protein malnutrition in the recent past," minister Vitharana told an economic forum organized the Institute of Policy Studies, a think tank in Colombo.

"And one of the factors is the increase in the price of foods. People with the limited incomes, or low incomes are cutting off where it is most costly. That is in the area of protein. That is going to have an adverse effect."

"I have been advocating that indirect taxes on essentials be totally removed to ensure that people are going to get the basic needs, adequate needs."

Instead direct taxes should be increased to finance state spending, he said.

According to a demographic heath survey of 2006/7, 16.6 percent of babies in the country were underweight, 21.1 percent of children under five were underweight (low weight for age) 14.7 percent were wasted (low weight for height) and 17.7 percent were stunted.

Over the past year the rupee fell from 110 to 132 to the US dollar as large volumes of bank loans were taken by authorities to manipulate energy prices, which in turn were accommodated by central bank credit (printed money) to keep interest rates down.

Currency depreciation pushes up the price of traded (exported or imported) foods.

Sri Lanka has kept food prices artificially higher than the rest of the world by jacking up import taxes to protect producers and landowners amid a rise in economic nationalism and an East European style autarky drive.

Taxes on potatoes and wheat flour are jacked up to force people to eat domestically grown rice which some have observed has acquired an almost 'religious' significance among nationalists.

Analysts say the pre-occupation with rice is in line with subsets of East European nationalist ideology: rural nationalism and primordialism which hark back to a glorious past.

Sri Lankan nationalists have gone so far as to propose the banning of serving wheat based foods to sick patients in state hospitals.

Sri Lanka also taxes imported tinned fish, which used to be a cheap source of protein to people without refrigerators. Milk powder, also used by people who cannot afford refrigerators is also taxed to boost self-sufficiency in dairy products.

In an autarkist drive one maize - the cheapest high protein animal feed to produce poultry and increase yields in milch cows - the state has also jacked up taxes to prevent cheaper grain from reaching feed millers, creating a cartelized supply.

Sri Lanka started growing potatoes in the mid 1980s in a bid to save 'foreign exchange'. Saving foreign exchange is a re-incarnation of pre-fiat money Mercantilism of balancing trade and saving gold, which was known as bullionism.

Sri Lanka has made it difficult for people to access alternate carbohydrates to rice as well as protein by keeping food prices permanently high partly due 'food security' concerns.

Food security activists upped the ante during a 2008 commodity bubble caused by loose monetary policy of the Federal Reserve, which not only pushed up food prices but also metals, precious metals and oil when measured in terms of its dollar paper fiat money.

Food security hit the world stage in 1974 following a world food conference. In the early 1970s commodities and oil hit fresh highs as the US dollar went off the gold standard to become a fully paper fiat money.

In 1971 President Nixon closed the gold window and banned exports of some foods, which liberal economists forced the US to abandon a few months later.

During the 2008 commodity bubble, Vietnam and India restricted exports, pushing up the price of rice to unnecessary highs.

But other analysts point to earlier historical events from l to the origins of 'food security' ideology.

Threats of restricting free trade began to emerge from Western European nations towards the late 19th century as liberal free trading ideas were pushed aside amid nationalist German expansionist wars.

Led by Britain, the Allied powers eventually blockaded Germany and the so-called Central Powers making the threat a reality during World War I.

Analysts say it also proved the constant fear of a nationalist nation that necessarily has poor foreign relations that their trade will eventually face problems.

In the run up to the World War II German National Socialists went on perhaps the most intensive state intervention ever on agriculture through their Reich Food Estate (Reichsnährstand) program to improve food security.

The autarkist drive replica watches which pushed up prices, eventually reduced production, similar to the results from communist state intervention of collectivization.

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