‘Kiri hodi’ taxes for the people
Prices of common ingredients to prepare the common ‘Kiri Hodi” curry and other essential food items are rising based on the special commodity levy imposed by the Government in the November 2013 budget presentation
The cess on imports of many basic food items was also revised but no indicative prices were given until this week when the Business Times obtained the latest Sri Lanka Customs tariff notice.
The commodity levy has been revised on imports of basic food items leading to sharp increases in the prices of salt, sugar, dried fish, sprats, vegetable oils, dhal, chick peas, green gram (mung beans), funnel, ground nuts, mustard seed pasta, soups, cereals, yoghurt, butter and margarine. The tariff notice says the special commodity levy on seeds of coriander is Rs. 202 per kilogram (kg), cumin seeds at Rs. 162, seeds of fennel at Rs. 52, turmeric at Rs.510, garlic at Rs.40, Urad Dal (Undu) at Rs.305, dried chillies at Rs.25, big onions at Rs. 25 and salt at Rs. 40, etc.
In addition the special commodity levy on a kilogram of sugar is in the region of Rs.30, milk powder at Rs. 350 and large size salmon tin at Rs.105.
Cess has been raised on wheat flour, cheese, curd, margarine, sauces, sausages, sweets, chocolates, cereals, pasta, vinegar, vegetables, mushrooms, nuts and fruits, fruit juice.
Cess has been introduced as a new levy for pepper, cinnamon, clove, nutmeg, and cardamom imports to promote local value addition, the government has announced.
However economic analysts say that as the bulk of the demand of these commodities is imports the government will be able to get more tax revenue,The price increase through the imposition of special commodity levy and Cess as proposed by the government to protect ‘import-competing industries’ has placed higher burden on consumers, they said adding that it was not clear as to whether the government plans to go back to a more protectionist industrial policy at the cost of domestic consumers or follow a ‘patriotic protectionist’ policy to raise enough revenue for treasury coffers.
Though the cost of living allowance has been increased for all public sector employees by Rs 1200 per month, it is not sufficient to meet the real cost of living that people faced with present inflation rate.
In a New Year message Treasury Secretary Dr. P.B. Jayasundera stated, “It is a misconception that the Government is trying to protect everything here and that we don’t want imports. This is wrong. What we are trying to promote is competitive business that allows us to compete with anybody. We are asking to expand manufacturing and business here (in Sri Lanka).”
Pointing out that though the country produces 50 per cent of requirements for products such as onion, potato and dry chillies, he noted that Sri Lanka still imports US$ 250 million worth of such items.
“Therefore economists trying to give wrong interpretations in this regard (which) is unfair,” he has said.
A revision in Cess on primary commodity exports and items vulnerable to undervaluation will help fill the Treasury coffers by Rs. 4 billion. The revision in the special commodity levy / customs duty for the support of local value addition will contribute a sum of Rs. 12.75 billion to the government’s overall revenue generation plan in 2014, a senior official of the Finance Ministry revealed.
With rapidly rising prices of commodities the real value of fixed income earned by public and private sector employees has been eroded to a great extent. Bringing down commodity levies especially taxes on fuel, electricity and other essential items is the ideal policy rather than introducing discriminatory policies on wage and salary hikes of public sector employees, the analysts said.