Sunday, 22 November 2020 11:19

Revised taxes and price control push commodities market into a mess

The Government has complicated commodities trading by slashing the Special Commodity Levy (SCL) on some essential commodities to 25 cents from Rs.50 and enforcing the maximum retail price (MRP/controlled price) without considering tax revenue implications and market dynamics, consumer affairs experts divulged.

Taxes were reduced to 25 cents from Rs.50 for sugar and big onions and from Rs.10 for dhal while SCL on canned fish was reduced from Rs.100.

After reducing the duty, the government fixed the MRP on sugar, Mysore dhal and canned fish at Rs.85. Rs.65 and Rs.200, respectively.

But the traders have continued their sale of these essential commodities at high prices claiming that there were large stocks of these food items at the Pettah market which were imported by paying the earlier high SCL.

The Consumer Affairs Authority (CAA) is compelled to follow proper procedure before issuing gazette notification declaring MRP on goods and services in accordance with the consumer affairs authority act, they emphasised.

But it has not considered the relevant clauses in issuing recent gazette aimed controlling prices in the local market going against the normal procedure, they pointed out.

It safeguards the rights of not only the consumers but also the traders who are subjected to injustice. Both the goods and services are covered within the ambit of the Act.

Before arriving at a decision on MRP consumer affairs council functioning under the CAA should conduct investigation into the prevailing high prices in the market involving importers, or manufacturers and traders and enter into an agreement with them without fixing prices arbitrary.

According to section 14 subsections (I) of the act the CAA should enter into a written agreement with those relevant parties on the MRP.

Thereafter CAA will have to gazette the MRP in accordance with recommendations of the council.

This procedure has not been adhered to by CAA, essential under the present circumstances commodity importers said adding that existing stocks of sugar, dhal, big onions and canned fish had been imported before the reduction of taxes.

A spokesman of the Essential Food Commodities Importers and Traders’ Association said that the MRP has been enforced before the arrival of new stocks, he said complaining that they had to incur massive loss if they are to sell current stocks in hand and at warehouses at lower prices.

The total loss of duty reduction is estimated at over Rs.5 billion for the importation of sugar, dhal, big onions, lentils and canned fish while sugar importers alone had to bear a loss of Rs.4.42 billion for the stock in hand of 88878 MT, if they sell at current MRP since these stocks were imported at the earlier high duty rate.

Under this set up no importer would be able to find cash to settle the credit facilities obtained from banks and suppliers, importers said pointing out this will affect both importers and banks as well. They appealed to the president to resolve this matter.

Meanwhile the government has re-imposed the SCL on canned fish increasing it again to Rs. 100 from 25 cents with effect from midnight on Wednesday, a day after the presentation of budget 2021 in parliament on Tuesday.

This decision was taken to protect local canned fish producers and importers with 250 container loads at their stores. The current fixed price for canned fish at Rs.200 per tin will now be increased to Rs. 248.50 under the fresh tax.


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