Sri Lanka Government tax revenue is declining continuously as the Special Commodity Levy (SCL) as it is has not been fixed proportionately to the US dollar (USD) resulting in traders earning excessive profits, the Committee of Ways and Means said.
Accordingly, the Committee said that the consumers had to bear a huge cost for purchasing imported essential food items such as big onions, potatoes, dried sprats, maldivian fish and green gram, particularly in the years 2022 and 2023 and the traders earned an excessive amount of profits.
It said that the Custom Duties are levied as SCL on the CIF values and there was a substantial price increase between the prices of these items (per 1kg) released by the Customs after levying the SCL and the market price.
“The traders earn a profit ranging from Rs.100 to Rs. 1,000 per kilo of these items when the market prices of these items are taken into consideration. Although the value of the rupee had appreciated against the US Dollar during the last quarter of 2023, consumers did not gain any advantage out of this situation,” the Committee said.
Although the value of the Sri Lankan Rupee (LKR) depreciated almost twice proportionately to the US dollar during 2023, the prices of all these items had been increased by three or more.
“The CIF value per 1kg in rupees for all items had decreased in 2023 compared to 2022,” it said adding for example the total profit of big onion traders is Rs. 80 billion in 2023 compared to the profit Rs. 29 billion in 2022.
The tax imposed by the Government decreased drastically during the period from 2018 to 2023, thereby reducing the total tax revenue of the Government except in 2022. However, this benefit had not been accrued to the consumers as the market price of big onions had been increased to Rs. 213 and Rs. 365 (per kilo).
The profit against investment of the importers was Rs. 109 per kilo in 2022 and Rs. 273 in 2023 indicating a profit against investment percentage was 105.8% in 2022 and 297.2% in 2023.