Sugar importers warn tax hike will hit consumers

Sugar importers have warned President Anura Kumara Dissanayake against any move to increase the current import tax on sugar, arguing that such a decision would lead to a sharp increase in prices, harm small importers, and place an undue burden on consumers.

At present, Sri Lanka levies a tax of Rs. 50 per kilogram on imported sugar, a rate introduced under the previous government.

Importers pointed out that prior to this change, the duty stood as low as 25 cents per kilogram, highlighting the dramatic escalation over the years.

According to industry estimates, Sri Lanka imports around 60,000 metric tonnes (MT) of sugar each month, which contributes approximately Rs. 3 billion in tax revenue to the state.

Importers claim that the tax was originally raised to protect domestic sugar producers such as Pelwatte and Sevanagala.

However, they now allege that certain large-scale importers, who currently stockpile roughly 60,000 MT of sugar, are lobbying for a further increase in the tax, from Rs. 50 to Rs. 80 per kilogram.

“If the tax is raised by Rs. 30, these importers stand to gain Rs. 1.8 billion in windfall profits overnight, without any increase in cost. It would be a blow to small and medium-scale importers, who are currently waiting on new shipments and have no such stockpile advantage,” one importer said.

The importers warn that the resulting increase in prices would be passed directly onto the public.

“Consumers will have to bear the cost as prices of essential goods like tea, bakery items, confectionery, and beverages will all go up,” importers noted.

Importers also argue that the current Rs. 50 duty is already high compared to international standards and caution that further increases could create artificial shortages, skew market dynamics, and deepen public hardship.

They highlighted that locally produced sugar, which makes up just 10% of Sri Lanka’s total sugar requirement, is brown sugar and unsuitable for industrial use in sectors such as baking and soft drinks manufacturing due to its lack of refinement.