ECONOMYNEXT – Sri Lanka’s cabinet of ministers have given approval to draft a bill to suspend the Special Commodity Levy, amid corruption concerns, following a proposal submitted President Ranil Wickremesinghe, spokesman Bandula Gunawardana said.
The SCL is applied as a single tax, instead of the tax-on-tax effect seen when duty, CESS, PAL and VAT are applied on top of food imports in particular.
But SCL is imposed overnight as people are sleeping, without any discussion in parliament, raising serious concerns about its constitutionality as well as discretion and insider knowledge.
“There have been concerns about its mis-use,” Gunawardana said. “When taxes are suddenly changed there have been concerns.”
An International Monetary Find corruption diagnostic report has flagged the midnight tax as a discretionary door opened for corruption.
Similar sudden changes have also been made in an export CESS tax, unsing gazettes.
Sri Lanka’s IMF review will be passed after several ‘pior actions’.
But, it has the advantage of being a single tax operating exactly like a single import duty officials have said, in a country where there are multiple border taxes slapped on top of each other, drawing the ire of trade partners.
However, due to the sudden midnight nature, it also adds to policy uncertainty in the country’s overall policy unpredictability. (Colombo/Mar27/2024)