Sri Lanka opposition slams cronyism in budget, commends restraints

(L-R) : Jeevith Senaratne, Director Operations - Star Garment Group; Shanaka Rabel, Group Chief Digital and Transformation Officer - Stretchline Holdings Ltd; Janaka Botejue, Chairman – Bernard Botejue Industries; Sanjeewa Kodikara, Chief Information Officer- Hirdaramani Group

Nov 23, 2013 (LBO) – Sri Lanka’s main opposition United National Party slammed the ‘cronyism’ displayed in some of the tax cuts but said bringing down the deficit amid lower tax revenues deserved recognition. Opposition legislator Harsha de Silva said some of the duty and tax concessions for luxury branded goods and the value added tax and nation building tax waiver for casinos while raising food taxes was shameful.

“Sri Lanka has one of the highest taxes on foods in the entire region,” de Silva told reporters.

“Now taxes on branded items had been lowered and 15 billion rupees was expected from food related taxes.”

De Silva said instead of an export orientation the budget promoted more import substitution.

Import substitution industries go through the motions of producing a good but makes profits by arbitraging the import tax gap, in the same way as a smuggler.

Sri Lanka’s high food taxes are also partly related to autarky, an oppressive policy that harms the poor and keeps food prices high, originally propagated by the so-called historical school of economics in Germany.

Autarky also

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