Tuesday, March 06, 2012

Taxes on potatoes increased by Rs.10/ kg

The Government has increased taxes on potatoes by Rs.10/kg, taking the total tax to Rs.30/kg.

This took me by surprise, I was expecting the next round of price increases during the extra long stretch of holidays between the 6th of April and the 14th of April. Thus we have a tax increase, albeit a relatively small one, out of season, so to speak. Well, not quite. Tomorrow is a mid-week holiday and Sri Lanka managed to win a game of cricket this afternoon so, so it is perhaps a good day to release bad news, when the public are preoccupied with other things. Those with long memories will recall that there was one fuel price hike, on the weekend of the World Cup Cricket final.

The Treasury has mastered the art of taxation by stealth. To begin with, very few tax increases are actually proposed in the budget, which is when they are supposed to be presented. Instead, starting from around September (or in the case of last year, in October, just after the local council polls) a few taxes are increased every week or so. After the budget is presented in mid-late November comes another round of increases, usually between January and April.

This time around, what has been shocking is the frequency and size of the tax hikes. Clearly finances are under pressure and the Government is doing its best to raise revenue and shore up the currency. With dollar denominated loans to pay, every decline in the exchange rate increases the size of the debt and the cost of servicing it.

The fuel price hike alone left consumers reeling, I can already see a reduction in traffic on the roads, now we have others to contend with potatoes and only heaven knows what we will be hit by during the long April holidays.

When I was a child and we asked our parents for things they would sometimes retort that 'money does not grow on trees'. Colombo was a much greener city then, but that piece of wisdom is one that the rulers would do well to ingest. It is unconscionable to keep heaping taxes on people, while tolerating, waste and corruption on a mammoth scale. It is time to start cutting costs and passing those savings on to the citizenry.

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