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SL earns Rs. 4.3bn in import taxes on rice

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Sri Lanka has earned 4.3 billion rupees in taxes from imports of 67,000 metric tonnes of rice, reports said, indicating the extent the consumer is taxed to grow expensive rice in the country.

Sri Lanka taxes rice at 65 rupee a kilogram (65,000 rupees a tone) to keep the basic staple of the people, about 50 percent higher than the rest of the world.

The ‘tax’ paid by the consumer in the process of filling their stomachs, is ‘arbitraged’ by the paddy producing and marketing lobby.

Though the International Monetary Fund claims that the tax to GDP ratio is low, a large volume of taxes paid to keep protected businesses are ‘arbitraged’ by domestic industries who are not competitive due to years of protection.

Though the people pay the tax plus price, the money does not go to the Treasury but is pocketed by producers who have no incentive to boost yields.

Sri Lanka produced 1.65 million metric tonnes of rice in the last Maha season and 1.24 million in the Yala season, taking the total to 2.89 million kilograms.

The total tax arbitraged from customers compared to regional prices is 187.8 billion rupees for the rice sector which shows the extra money people in Sri Lanka pay to fill their stomachs. It is about 0.6 percent of GDP.

Sri Lanka is said to have been growing rice at least 800 BC and irrigation works date back over 300 BC, making rice growing one of the oldest ‘infant’ industries in the world.

Both India and Pakistan have export competitive rice industries producing globally traded grades of rice. In Sri Lanka, rice is grown for self-sufficiency or autarky, a concept that gained ground in Nazi Germany following Allied blockades of 1914-18 during World War I.

Infant industry was also taken to food by German historical economists like Adolf Wagner in the run up to full National Socialism.

“The representative literary champion of modern German protectionism was Adolf Wagner,” explained Austrian economist Ludwig von Mises.

“The essence of his teachings is this: All countries with an excess production of foodstuffs and raw materials are eager to develop domestic manufacturing and to bar access to foreign manufactures; the world is on the way to economic self-sufficiency for each nation.

“Adolf Wagner was not a keen mind. He was a poor economist. The same is true of his partisans. But they were not so dull as to fail to recognize that protection is not a panacea against the dangers which they depicted.

“Import duties for food were in their eyes a short-run remedy only, a measure for a period of transition. The ultimate remedy was war and conquest.”

Another German theoretician Karl Marx, also criticized import protection particularly in foods, saying it was to speculate on the famine of the people.

His friend and collaborator Friedrich Engels, who studied protectionism in depth, said it was an ‘endless screw’ from which there was no escape, as a political constituency was created.
(ECONOMYNEXT) 
Except for the headline, this story, originally published by ECONOMYNEXT has not been edited by SLM staff

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A few showers expected today

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A few showers will occur in the Western, Sabaragamuwa and North-western provinces and in the Nuwara-Eliya, Kandy, Galle and Matara districts today (July 01), the Department of Meteorology.

Fairly strong winds of about 30-40kmph can be expected at times over the Western slopes of the central hills and in the Northern, North-central and North-western provinces and in the Trincomalee and Hambantota districts.

The general public has been requested to take adequate precautions to minimize damages caused by temporary localized strong winds and lightning during thundershowers.

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Fuel prices upped

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The Ceylon Petroleum Corporation (CPC) has announced a revision of fuel prices, effective from midnight today (June 30).

The price of Petrol 92 Octane has been increased by Rs. 12 to Rs. 305 per litre, while the price of Kerosene has been increased by Rs. 07 to Rs. 185 per litre. The price of Auto Diesel has also been increased by Rs. 15, bringing it to Rs. 289 per litre.

However, the prices of Petrol 95 Octane and Super Diesel remain unchanged, according to Ceypetco.

The new fuel prices are as follows:

• Petrol Octane 92 – Rs. 305 (increased by Rs. 12)
• Auto Diesel – Rs. 289 (increased by Rs. 15)
• Kerosene – Rs. 185 (increased by Rs. 7)
• Petrol Octane 95 – Rs. 341 (not revised)
• Super Diesel – Rs. 325 (not revised)

Meanwhile, Lanka IOC has also revised retail fuel prices to match Ceypetco prices.

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Ex-minister Gamini Lokuge passes away

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Former Minister and veteran politician Gamini Lokuge has passed away today (June 30) at the age of 82.

Commencing his political career in 1960 as a member of the United National Party, his first successful national-level campaign came in 1983, when he was elected by a clear majority to represent the Kesbewa District.

He served as Minister of Tourism during the UNP-led governments in 1989 and 2002. In 2006, following personal disagreements with then UNP leader Ranil Wickremesinghe, he crossed over to the government of former President Mahinda Rajapaksa.

In January 2007, Lokuge was appointed Minister of Sports and Public Recreation. He was re-elected to Parliament in both 2010 and 2015.

On 27 November 2019, he was appointed State Minister for Urban Development, and on 12 August 2020, he assumed duties as the Cabinet Minister of Transport.

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