Sri Lanka raises taxes on foreign milk powder

May 04, 2012 (LBO) – Sri Lanka’s finance ministry said it has raised taxes on imported milk powder by a further 15 percent or 92 rupees a kilogram, pushing up prices further as domestic dairy farmers threw away fresh milk saying there was no demand. Import taxes work by inflicting harm of the poorest sections of the population as richer citizens would continue to consume despite high prices.

The finance ministry said 84,000 metric tonnes of milk powder were being imported annually at a cost of 36 billion rupees.

Milk is a popular whitener for tea. Some poorer Sri Lankan citizens buy powder by the spoonful from small shops.

In Sri Lanka taxes on any food can be raised by the state without going to parliament by a mid night gazette.

According to data published in Sri Lanka’s Ceylon Today newspaper last year the state charged taxes of 2.4 billion rupees on milk powder not containing added sugar and a further 618 million rupees from processed cheese.

The finance ministry said taxes on infant milk powder will not be raised.

The tax increase in imported milk powder comes only weeks after Sri Lanka’s consumer affairs minister refused importer requests to raise the price of milk after the rupee exchange rate fell from 110 to