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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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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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“Sri Lanka, only Asian country currently holding talks to revise Trumps’ tariffs”

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Sri Lanka is the only country in the Asia region currently holding discussions with officials in the United States to revise the tariffs introduced by US President Donald Trump earlier this year, according to Minister of Labour and Deputy Minister of Economic Development Prof. Anil Jayantha Fernando.

Joining the Parliamentary debate today (30), where MPs are debating the fiscal strategy statement of the government, the Deputy Minister of Economic Development stated that they are hopeful the government will be able get a better deal from the US regarding the 44% tariff imposed earlier this year.

A Sri Lankan delegation last month held discussions in Washington, D.C., focusing on tariff-related matters, following an invitation extended by the Office of the United States Trade Representative (USTR).

The reciprocal tariffs imposed by United States President Donald Trump has been paused for 90 days at present.

Deputy Minister of Economic Development Prof. Anil Jayantha Fernando in Parliament stated that the government will take all steps within their powers to reduce the tariffs imposed by the US which will have a major bearing on many local industries.

The Deputy Minister while the government is taking such important steps to safeguard local companies, the opposition is only focused on jeopardizing the work of the present administration

(adaderana.lk)

(Except for the headline, this story, originally published by adaderana.lk has not been edited by SLM staff)

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Indian officials extend US visit to iron out trade deal, sources say

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Officials from India will extend their Washington visit to try to reach agreement on a trade deal with U.S. President Donald Trump’s administration and address lingering concerns on both sides, two Indian government sources said on Monday.

Trade talks between India and the U.S. have hit roadblocks over disagreements on import duties for auto components, steel, and farm goods, ahead of Trump’s July 9 deadline to impose reciprocal tariffs.

The Indian delegation had been expected to conclude discussions by last Friday, but was staying on until at least Monday evening to iron out differences and move towards an agreement, officials said, declining to be named as the discussions are private.

“There are certain disagreements over opening up the agriculture and dairy sectors, though India has offered tariff concessions on 90% of tariff lines. A final call will be taken by the political leadership of the two countries,” one of the government sources said.

“The Indian delegation could stay for another one to two days if discussions continue,” the second source said.

India’s commerce ministry and the U.S. Trade Representative Office did not immediately respond to requests for comment.

Agriculture and dairy are “big red lines” for India in its ongoing trade negotiations with the U.S., Finance Minister Nirmala Sitharaman told the Financial Express newspaper in an interview published on Monday.

“Yes, I’d love to have an agreement, a big, good, beautiful one; why not?” Sitharaman said, adding that an early conclusion of the trade deal would serve India better.

Trump said last week that America was going to have a “very big” trade deal with India, but gave no details.

(Reuters)

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