Sri Lanka lowers food taxes, gas price allowed to fall

July 14, 2012 (LBO) – Sri Lanka has cut excessively high taxes on several imported foods improving the food freedoms of the poorest sections of the population and has also allowed cooking gas prices to fall. Sri Lanka was pushed into a balance of payments crisis in 2011 by credit taken to manipulate oil prices and money printed to manipulate interest rates. Prices of all goods went up when the rupee fell from 110 to 134 levels. Monetary policy has since been tightened.

Economists and analysts have called for a price formula for petroleum to prevent arbitrary pricing by rulers from undermining macro-economic stability. Global petroleum prices have plummeted during the past several months, so far only gas prices have been cut.

Sri Lanka has peculiar economic policies where basic foods prices are kept at much higher than the rest of the world by blocking access to cheaper food, but rulers print money to give energy subsidies.

Taxes are suddenly raised by a midnight gazette notice while citizens are literally asleep.

Earlier this year consumers saw a head on clash between nationalist protectionism and interventionism when taxes on milk powder was suddenly raised by rulers through a mid nigh ga