ECONOMYENXT – Sri Lanka’s cabinet has decided not to abolish a Special Commodity Levy Act to maintain protection to farmers, and its impact on food prices, a government statement said.
On March 25, 2024, the then cabinet had decided to abolish the SCL Act and replace the tax with value added tax.
There were 63 items listed under the SCL Act.
The cabinet decided to reverse the decision to abolish the SCL Tax as the state will not be able to give protection to farmers and the impact on food prices.
While the SCL Act has the salutary effect on avoiding tax-on-tax, where value added tax is charged on top of other import duties as Sri Lanka has a plethora of border taxes, SCL levies are also at very high rates.
The taxes on rice and potatoes are close to 50 percent. Sri Lanka protectionist taxes, self-sufficiency ideology, pits farmers against malnourished children, critics have said.
A cabinet paper by President Anura Kumara Dissanayake proposing that the tax rates to continue from 2025-01-01 was approved by the cabinet. (Colombo/Dec19/2024)