Sugar importers meet Ravi K

• Finance Minister remains firm on new tax, directs the issue to Department of Trade, Tariff and Investment Policy
• Trade anticipates prices to shoot up to Rs. 86-88 levels

By Charumini de Silva

The Essential Food Commodities Association met Finance Minister Ravi Karunanayake on 17 September to discuss the issues they might have to face due to the recent tax hike that was imposed on sugar imports.

“The discussion with the Minister went on very well and he directed us to have a meeting with the Department of Trade, Tariff and Investment Policy Director General next week,” a spokesperson from the Essential Food Commodities Association told the Daily FT.

He said that the association made it clear to the Minister that the ruling of a controlling price for sugar imports was unreasonable.



“We handed over a written appeal to the Minister pointing the fact that in an open market economy, which is highly dependent on an import-based market, it is very unreasonable to have controlled prices on commodities like sugar,” he explained.

Finance Minister Ravi Karunanayake said that there would be ‘no change’ in the ruling which was made recently with regards to the sugar import tax hike.

“The directive given to the Consumer Affairs Authority (CAA) to ensure maintenance of specified retail price in the market will be unchanged,” the Minister said. 

“We have only taxed the undue profits that are enjoyed by the sugar importers at present and have passed on the benefits of the tax hike to the consumers,” Karunanayake added.

The Finance Ministry on 9 September imposed a special commodity levy of Rs. 12 per kilo with a ruling that the hike could not be passed on to the consumers. 

He went on to say that the association would be meeting the Industry and Commerce Minister sometime next week as the Consumer Affairs Authority (CAA) falls under his ministry.

The association members immediately contacted the Consumer Affairs Authority (CAA) to do away with the control price on sugar, but the authority only promised of considering their suggestion of lifting the control price over sugar.

Noting that the rupee had depreciated around 6% during the past two weeks, he asserted that sugar importers would face great difficulties in the coming weeks if the exchange rate continued to depreciate at its current pace.

Elaborating on present sugar prices in Colombo, he said that they were still capable of providing sugar at the price of Rs. 81 mainly due to the stocks that were imported before the tax hike on 9 September.

Noting that it would be very difficult for sugar importers to maintain the price at the current level as the rupee continued to depreciate, he anticipated that prices would increase up to Rs. 86-88 levels in the near future.

“With new stocks of sugar coming in at increased prices, importers are compelled to consider higher pricing methods at least to cover up the cost. If the importers are unable to meet the sugar demand under this tax hike, again the blame will be passed on to us,” he added.

The association urged the Government to consider doing away with the control price on sugar imports.

The Finance Ministry on 9 September said there would be no change in the prices for consumers and current levels of Rs. 95 per kilo of sugar in packet form and Rs. 88 per kilo for those sold in loose form would be maintained. The Consumer Affairs Authority (CAA) has been directed to ensure the maintenance of the specified retail price in the market.