Committee on Ways and Means reveals that the profit earned by traders per kilo from the sale of imported essential food items based on the market price is Rs. 100-1000

Instructions to withhold the gazette for the extension of licenses for the importation of electric vehicles for Sri Lankans employed abroad until the forensic audit conducted by the Auditor General is completed.
Instructions to take prompt action under the Inland Revenue Act to recover Rs 188 billion in arrears of tax that could be collected
Instead of opening tax files for persons above 18 years of age, it is advised to digitalize the data of persons earning more than Rs. 100,000 per month.

It was revealed in the Committee on Ways and Means that the profit made by traders for one kilo by selling imported essential food items based on the market price is between Rs 100-1000.

This was revealed when the Committee on Ways and Means met in Parliament on 2nd April 2024 under the chairmanship of Hon. Patali Champika Ranawaka, Member of Parliament.

There was a discussion on the discrepancy between the market price of a kilo of essential food items and the import price. The officials of Central Bank of Sri Lanka, Department of Trade and Investment Policies, Sri Lanka Customs, Import and Export Control Department, Department of Censors and Statistics, Hector Kobbekaduwa Agrarian Research and Training Institute were summoned for the committee meeting.

It was revealed that since 2018, there has been a continuous decline in the tax revenue imposed by the government on imported goods, and this has been caused by the mismatch of the Special Commodity Levy (SCL) imposed on imported essential food items in accordance with the value of the US dollar. Accordingly, it was revealed that the consumers have not benefited from this as it costs a lot of money to buy these goods, but the traders have made a significant profit by selling these imported essential food items. Accordingly, it was revealed that the profit was between Rs 100-1000 per kilo based on the market price.

Also, based on these facts, the huge disparity between the market price of a kilogram of essential food items and the price at which goods are released from customs after the imposition of special commodity tax was also discussed here.

Accordingly, the Chairman of the Committee instructed the Sri Lanka Customs officials to submit all the reports related to the import of essential food items to the Committee on a weekly basis.

The chairman also emphasized to the officials of the Inland Revenue Department the importance of formally registering the importers who import goods under category 2525 in order to collect value added tax (VAT) and streamlining the import process of goods under category 7000. He also instructed to take steps to collect taxes according to the Inland Revenue Act for the undue profits earned by the importers during the importation of essential food items during the period from 2018 to 2023 and to report the progress to the committee by the end of this month.

Also, the importance of the intervention of the Consumer Affairs Authority to prevent consumer exploitation during the festive season was also emphasized here. Also, instead of buying essential food items from importers, the committee also advised that the Ministry of Trade, Commerce and Food Security should prepare a program to directly import and deliver them to the consumer. The committee also advised to prepare a program to inform the public about the price following the customs clearance, market price and maximum retail price of essential food items through websites, mobile applications and social media.

In addition, the progress of the forensic audit conducted by the Auditor General regarding the irregularities in granting licenses to import electric vehicles to Sri Lankans working abroad was discussed in the meeting. The committee instructed the relevant parties to suspend the gazette extending the granting of licenses to import electric vehicles for Sri Lankans employed abroad until the forensic audit conducted by the Auditor General is completed.

Also, the collection of arrears of tax was discussed here and the following instructions were given to the Inland Revenue Department. Accordingly,

• Immediate action (such as acquisition of properties/assets) as per Inland Revenue Act to recover Rs 188 billion in recoverable tax arrears.

• Taking necessary action to recover tax withheld within 3 years due to taking legal action.

• To provide the list of tax evaders and organizations to the committee within a week

• Establishing a public private partnership model through an open tender to maintain the Revenue Administration Management Information System (RAMIS).

• Providing the Attorney General's opinion to the Committee on whether the signed agreement information related to the Revenue Administration Management Information System (RAMIS) can be released to a third party.

• Instead of opening tax files for persons above 18 years of age, taking data of persons earning more than Rs.1 lakh per month (25 lakhs) on a digital platform,

State Ministers Hon. Lasantha Alagiyawanna, Hon. Sisira Jayakodi and Hon. Anuradha Jayaratne, Members of Parliament, Hon. W.D.J Seneviratne, Hon. Dayasiri Jayasekara, Hon. Udayana Kirindigoda, Hon. Wasantha Yapabandara, Hon. Shanta Bandara, Hon. Jayaratne Herath, Hon. Chandima Weerakkodi, Hon. Ali Saheer Maulana, Hon. Asanka Navaratne, Hon. Gamini Valeboda and Hon. Weerasumana Weerasinghe were also present in this committee meeting.

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