ECONOMYNEXT – Sri Lanka has hiked an import tax on potatoes by 10 rupees to 40 rupees a kilogram and on onions by 39 rupees to 40 rupees a kilogram in a bid to give extra profits to the farming lobby.
The new so-called special commodity levy are charged with effect from May 02. Sri Lanka’s rulers can raise taxes by mid-night gazette while citizens are sleeping without seeking prior approval from the parliaments, an insitution that was originally set up to control arbitrary ruler taxes.
Import taxes allows the farming lobby to exploit the hunger of the weakest members of society by forcing them to buy food at higher prices than in other countries and avoid any productivity increases.
Sri Lanka’s potato or onion farmers cannot produce food that are price of quality competitive to export.
Potato is a classic take of economic rent seeking.
Potatoes is grown on land owned by so-called potato merchants (ala mudalali) who ‘rent’ their land to the growers at high prices using the protective taxes.
According to central bank data the wholesale price of Nuwara Eliya potato was 103.75 rupees a kilo in the Dambulla market in the week ending May 03 and the retail price was 115 rupees
Imported potatoes in the Pettah market was 87 rupees after paying freight.
Imported big Onions were retailing at 78 rupees a kilo and red onions at 197 rupees. (Colombo/May07/2018)