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Sugar tax cut: Facing unsavoury allegations

13 Dec 2020

 Trade Ministry not referred: Minister  

By Maheesha Mudugamuwa  Allegations have been levelled against the Government for its inability to reduce the market price of sugar even though it had cut off the sugar tax by almost 100%.   The Opposition political parties alleged that the Government is fulfilling a need of a few businessmen while incurring billion-rupee losses due to the tax reduction.  National People’s Power (NPP) MP Anura Dissanayake told Parliament last week that the reduction of the sugar tax to 25 cents would reduce the tax revenue due to the Government by Rs. 10 billion and the loss incurred doesn’t even pass to the public, as the market price of sugar remained unchanged despite the tax reduction.  He stressed that the people thought that this tax reduction would bring down the price of sugar in the market, but it was not so. Instead, the Government has lost tax revenue and a notorious group had diverted the wealth due to the country's Treasury to their homes or businesses by other means.  He pointed out that when taxes are increased on certain goods and imports are restricted or imports are banned, there is a problem in reducing the sugar tax to 25 cents.  On 10 November, the Consumer Affairs Authority (CAA) issued the gazette notice saying the wholesale and retail price on white sugar will come into effect from that day.  The gazette states that acting under the powers vested in it by Section 20 (5) of the Consumer Affairs Authority Act No. 9 of 2003, the CAA hereby orders that no importer, distributor, supplier, or trader shall sell, expose, offer, or display for sale or supply for sale white sugar above the maximum price.  Accordingly, the maximum retail price of packeted white sugar has been set at Rs. 90 per kilogramme, unpacketed white sugar at Rs. 85 per kilogramme, and the importer’s maximum wholesale price at Rs. 80 per kilogramme.  Nevertheless, as alleged by the consumers, the sugar is not available at local markets for the prices gazetted by the CAA.  Commenting on the recent sugar issue, Trade Minister Dr. Bandula Gunawardana told The Sunday Morning that the decision to remove the tax on sugar was taken by the Ministry of Finance and they did not refer the Trade Ministry prior to taking the decision.  “The sugar prices were reduced so as to avoid a certain group of businessmen earning huge profits,” he said, adding that the CAA should monitor whether the prices have been reduced as per the recent gazette notification.     


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