• Defends levy change as Govt. policy to reduce CoL
• Insists categorising Rs. 16 b as revenue loss an unfair oversimplification 
• Says tax policy based on Govt. priorities including policy, inflation, protecting reserves 
• Argues same changes done frequently for essential times including potatoes, dhal and tinned fish
• Insists sugar price did reduce gradually and relief passed onto consumers  

Treasury Secretary S.R. Attygalle yesterday denied any public revenue loss from the sugar commodity levy change, insisting the tax revamp was a policy based decision to reduce cost of living and terming it any other way was unfair oversimplification.

Attygalle, speaking to reporters at the Finance Ministry, insisted that seeing a loss of Rs. 16 billion revenue to the consolidated fund from the commodity levy reduction was inaccurate as taxes worked in complex ways. 

He pointed out that the decision to reduce the sugar levy from Rs. 50 per kilo to just Rs. 0.25 was a policy based decision made because the Government felt that the cost of living was too high and prices needed to be reduced to provide relief for consumers.

“Any Government decides to impose or change taxes for a variety of reasons. They can include the need to preserve reserves, protect local producers, and control the cost of living. Governments impose taxes based on policy, Budget decisions, inflationary pressures and a host of other reasons. When the sugar levy was changed it was done as part of Government policy to reduce cost of living. It is baseless to say that there was a Rs. 16 billion loss of public revenue and blame the Treasury for the change,” Attygalle said.

Drawing multiple examples the Treasury Secretary pointed out that the Finance Ministry regularly challenges taxes on other essential items such as dhal, potatoes and tinned fish to provide public relief. He also noted that due to a Government policy vehicle imports had been suspended completely since early last year but no one could fault the Treasury for the ensuing loss of tax revenue because it was done to protect forex reserves. 

“However, you cannot calculate the revenue loss and say there was a crime committed. Even though there wasn’t an immediate change in sugar prices after the levy change sugar prices did gradually come down in the market. Today a kilo of sugar is about Rs. 115 but without the levy change it would be Rs. 175 per kilo, so there has been a public benefit.”

Attygalle said the Ministry was aware that when the levy change was implemented there were already 72,000 metric tonnes of imported sugar in the country, which were sold at higher prices because they were purchased under the higher levy. However, once the levy was reduced newer imports were sold at lower prices. 

“This is how markets work, here and around the world. Even after the levy changes prices remain high for a period of time and eventually taper off when the tax impact trickles down. But if we raised the levy, instead of reducing it, then the importers would have immediately hiked up prices to increase profits. This is the way the economy works. The Treasury or the Finance Ministry cannot be blamed for this.”

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