Sri Lanka earns Rs22.1bn from food taxes: report

Sri Dharanee Performance Arts Theatre

June 12, 2011 (LBO) – Sri Lanka has earned 22.1 billion rupees from taxes imposed on several basic foods imported in to country in 2009, with sugar and milk powder bringing in the most amount of money, a media report said. The Island newspaper said the information was tabled in parliament in response to a question from the opposition.

Milk powder had generated 6,760 million rupees, sugar 7,410 million, onions 3,490 million and potatoes 2,210 million rupees in tax revenues.

Sri Lanka taxes several basic foods to satisfy ‘domestic production’ and ‘import substitution’ lobbies, keeping food prices unnecessarily high and volatile.

Taxes on dhal (lentils) had brought in 810 million rupees, canned fish 1,010 million and rice 410 million rupees. The list did not contain taxes earned from wheat which is also taxed to drive the people towards locally produced rice.

Sri Lanka also restricts the import of maize, causing frequent shortages and price volatility, hurting poultry farmers.

The state has also imposed price controls on rice and poultry. Sri Lanka also has very high cooking oil prices due to heavy taxation of imported vegetable oil.

Years of heavy state intervention and protection has given n