Local News Update: Sri Lanka has cut a protectionist tax of 50 kilograms of rupees on imported potatoes, slapped to raise the farming lobby’s income, to 25 rupees as rice and wheat prices have spiked in December.
As of December 25, the lower tax on imported potatoes will be effective, the Ministry of Finance said.
Landowners in the central highlands of Sri Lanka rent their land to farmers to grow potatoes because of fat income from import duty security, in classic rent-seeking conduct with no incentive to increase yields to rates seen in other countries or reduce costs.
As vegetable prices increased, Finance Minister Mahinda Rajapaksa issued a gazette notice from midnight on December 25.
From around February, domestic potatoes would come onto the market and the tax cut would not affect farmers ‘ income.