Rs. 15 billion State revenue loss due to tax removal - Trade Minister

Uditha Kumarasinghe, Irangika Range and Sandasen Marasinghe

Trade, Marketing Development, Co-operatives and Consumer Services Minister Bandula Gunawardhana yesterday told Parliament that the Government has incurred a Rs.15 billion revenue loss due to removal of custom duty on 10 imported essential consumer items between December 2006 to December 2007 to relieve the public burdened on the rising Cost of Living.

The Government is committed to provide maximum relief to consumers following extensive strategies to control unnecessary price hikes of essential commodities. "We had granted tax relief sacrificing a huge amount of Government revenue," he said.

The Government commenced granting tax relief for the import of essential items since December 2006 on the requests by essential item importers and considering proposals presented by the Ministry, the Government imposed a small unit tax by removing a number of taxes on 12 essential items such as sugar, potatoes, dhal, red onion, B onion, green gram, sprats, dried chillie and canned fish since July 2007 as a relief measure to consumers, he said.

For the first time in history, the Parliament approved the Act on Specific Commodity Tax for Essential Consumer Items by slashing various taxes.

Under this many taxes including Ports and Aviation Levy (PAL) Cess, Surcharges and Social Responsibility Levy (SRL) were removed on 10 essential items and brought them under the Small Unit Tax, the Minister said.

A Gazette notification has been issued introducing a Special Commodity Levy. According to the notification, the essential item importers have to pay a single tax with the implementation of Special Commodity Levy.

Tax relief on potatoes is 56 per cent while it is 106 per cent on Watana dhall. The relief for gram is 75 per cent while dhal has been provided a tax relief of 72 per cent.

Tax relief for dried chillie is 47 per cent while it is 16 per cent on B onions. The tax relief for canned fish is 63 per cent.

The tax for imported milk powder (1kg) is only Rs.5. The Government has to incur a loss of Rs. 86 per a kilo of imported milk powder due to this tax relief.