Sugar mafia exploits new tax to maximize profits

Sugar mafia exploits new tax to maximize profits

Sugar mafia exploits new tax to maximize profits

Written by Staff Writer

21 Sep, 2018 | 10:11 pm

Colombo (News 1st) – A new tax structure for sugar was introduced by the Ministry of Finance last Tuesday (September 18), after the removal of the Special Commodity Levy. Importers say, the price of a kilo of sugar in the world market is roughly Rs. 56. According to the new tax system, a kilo of sugar will include a tax burden of Rs. 43.

The removal of the Rs. 31 Special Commodity Levy, has paved the way for an added Rs. 12 tax burden that must be borne by sugar importers.

The Finance Ministry’s argument is that the price which needs to be paid for a kilo of sugar in the world market, has comparatively reduced with the trends in the past, and therefore this would not impact the retail market. However, the price of a kilo of sugar which was at Rs. 91 is now a Rs. 103, following the introduction of the new tax structure. A kilo of sugar in the wholesale market has increased by nearly Rs. 10.

Hemaka Fernando, the Deputy President of the sugar importers association states that the tax imposed on the retailers is ultimately borne by the public. He states that in the wholesale market 01 Kg of sugar is sold at Rs. 105 but when sold at the village level it would amount to around Rs. 130

During a discussion at the consumer affairs authority on Thursday (September 20), it was revealed that nearly 40,000 metric tons of sugar was imported prior to the implementation of the new tax system. It was also revealed that these stocks are stored by three companies identified as Pyramid Wilmer, Wilson Trading and Pallegoda Trading.

According to Sugar Importers, one of the companies had purchased stocks from the other two companies prior to the new tax system. Hemaka Fernando states that a powerful group of people who were aware of the potential change in the tax structure had purchased and stored stocks of sugar. He noted that similar to all companies being negatively affected, importers of main food items are also negatively impacted by this change.

MP Bandula Gunawardana confirms this statement adding that between 40,000 and 50,000 metric tons of old stocks of sugar is being sold at a price of Rs. 100 rupees. He stated that the Consumer Affairs Authority accepted that old stocks of sugar are present in the country.

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