Remove 48% Rice Import Tax
On Friday, this newspaper carried an article under the heading ‘Food inflation at double-digit level’ with a strap-line that read, ‘For third consecutive month.’ That news item, to quote excerpts, said, ‘Food inflation continued to be at the double digit level for the third consecutive month (September), increasing by 10 per cent year-on year (YoY). High food inflation was led by an ordinary family’s rice bill increasing by Rs 436.87 YoY, coconut oil by Rs 243.42, vegetables by Rs 179.97, Mysore dhal by Rs 158.73, dried fish by Rs 110.87, fresh fish by Rs 101.64 and coconuts by Rs 84.06.
Rice politics plays big in Sri Lanka’s political landscape. It resulted in the defeat of at least three Governments due to their failure to address this issue. The first was at the Parliamentary Poll of 1956, the second in 1970 and the third in 1977, respectively. The fall of the then UNP Government at the 1956 Parliamentary Poll had its genesis at the Hartal of 1953 which cause was the UNP Government increasing the price of a subsidised measure (one kilo) of rice by 180 per cent (45 cents), ie from 25 cents to 70 cents in a budget balancing exercise amidst soaring rice prices in the international market.
The 1953 Hartal which was instigated by the now impotent Marxist LSSP resulted in 10 deaths due to Army and Police fire to quell the Hartal rioters resulting in the resignation of the then Prime Minister Dudley Senanayake. The then LSSP drew its support from the working class, virtually irrespective of race, drawing support from both the estate and the Jaffna Tamils as well, though the Hartal violence was confined to the ‘South,’ led-by the Western Province. The success of the 1953 Hartal saw the LSSP being pivoted as the second largest Parliamentary Group in the country at the 1956 Poll, with the UNP reduced to a mere eight seats, last seen it suffered an even worse rout 64 years later at the 2020 Parliamentary Poll where it won only a solitary seat.
The 1956 Poll was won by the SLFP led MEP Coalition. However, currently there is no rice subsidies with the market allowed to determine its price. Nonetheless, a steep hike of an ordinary family’s monthly rice bill by Rs 436.87 in only after the lapse of one year is a cause for concern, particularly in the context that rice is the staple diet of Sri Lankans. Meanwhile, the second occurrence that rice politics changed Governments was at the 1970 Parliamentary Poll where the then SLFP-led UF coalition routed the UNP Government to win two thirds of the Parliamentary Poll, with the promise of providing every citizen of this country two measures of rice free.
The then ruling UNP Government was reduced to 17 seats at that Poll. Needless to say that the SLFP-led coalition which came to power with the promise of two measures of rice free at the 1970 Parliamentary Poll, was routed at the Parliamentary Poll that followed, which was the 1977 Elections, for failing to keep up to its Polls pledge, with the UNP winning that Election by a record five-sixths majority. The SLFP at the 1977 Poll, suffered its most humiliating defeat to date, having been reduced not only to eight seats, but for the first time since its founding in 1951 and beginning with the 1952 Parliamentary Poll, ending up as not being one of the top two political parties up to then, the other top party till then being the UNP.
The 1977 Parliamentary Poll saw, after the UNP which won that Elections, the second largest party being the TULF which has at its base the Northern Jaffna Tamil based voter and not the SLFP. Meanwhile, the key to reducing a family’s rice bill is by liberalising rice imports. Currently, rice imports are subject to a total import tax of 48 per cent, comprising a 15 per cent import duty tax or a tax of Rs 28 on a kilo of rice, generally, whichever is more plus an eight per cent VAT plus a 10 per cent PAL plus a 15 per cent cess or Rs 28 on a kg of rice, respectively. Protectionism doesn’t develop excellence, but competition as demonstrated by the garment industry does. Reducing rice import taxes will not lose elections, but a high cost of living, will.