ECONOMYNEXT – Sri Lanka’s fisheries minister Douglas Devananda had given instructions to ban imports of canned fish, a government statement said, though the product is already taxed to give profits to rent seeking domestic producers.
Devananda instructed the Director General of the Fisheries Department Susantha Kahawatta to stop the importation of canned fish at a meeting held with Canned Fish Producers Association representatives at the Ministry of Fisheries Thursday (11), according to a Government Information Department statement.
The Canned Fish Producers Association had claimed people are not buying their products due to imports.
They had claimed that the price of imported tinned fish has decreased, and due to VAT and cess imposed by the government, they are unable to provide their products at the price of imported tinned fish, so they have to close their factories.
Like dairy products and building materials, imported tinned fish is already taxed to give high profits or ‘rents’ to some canned fish producers.
Sri Lanka usually promotes non-competitive rent-seeking import substitution business at the expense of consumers, to ‘save foreign exchange’.
Minister Devananda has asked the Secretary of the Ministry to take measures to levy an additional tax on imported canned fish.
Taxing imports and harming consumers to reduce competition is an ideology that is followed both by Mercantilists (so-called crony capitalists) and nationalists, with the Dutch East India Company and Hitler’s Germany (Nazi Autarky), being key examples.
Minister Devananda has asked the Secretary of the Ministry to take measures to levy an additional tax on imported canned fish.
Taxing imports or controlling imports to harm innocent consumers by reducing competition is an ideology that was followed both by Mercantilists (so-called crony capitalists) and nationalists, with the Dutch and British East India Companies and Hitlers Germany (Nazi Autarky), being key examples.
Classical economist Adam Smith warned against proposals by businesses, whom he called dealers, to reduce competition and harm the public.
“The interest of the dealers…in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public,” wrote Smith.
“To widen the market and to narrow the competition is always the interest of the dealers.
“To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens.
“The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention.”
“It comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.” (Colombo/Jan12/20024)
