Home ›› 22 May 2023 ›› Asia Biz
Sri Lanka has extended import taxes on a range of cereals, edible oils and fruits as food insecurity has worsened amidst the biggest currency collapse in history of the island’s central bank.
High nationalist taxes on foods pre-dated the latest crisis. Protectionist to keep food prices artificially high are usually imposed in the name of ‘saving foreign exchange’ or give bigger profits to farmers to increase ‘self-sufficiency’ or autarky.
Sri Lanka has chronic foreign exchange shortages from money printed to mis-target a policy rate or other rates along the yield curve by a reserve collecting (pegged) central bank, making it impossible to have free trade and strengthening the hands of economic nationalists and import substituting mercantilists.
Sri Lanka has malnutrition and stunting of children, which has worsened after the latest currency crises, the worst in the history of the Argentina style central bank which was set up in 1950.
A 75 rupee tax on maize was reduced to 25 rupees to produce ‘Thriposha’ a nutritional supplement for poor children.
The Thriposha campaign was started in the 1970s when the entire economy was closed amid money printing and import substitution in the wake of the collapsed of the Bretton Woods system in 1971-73.
The taxes are imposed for one year under the Special Commodity Levy Act, which aims to make taxes transparent and simple by avoiding taxes on taxes effect from import duties, port and airport levy and value added tax.
The taxes usually imposed by administrative remit, while the population, including the hungry are sleeping.
Among taxes include 65 rupees on a kilogram of some types of rice, 325 rupee on black gram flour, 220 rupees a kilo on ground nuts.
