Sri Lanka’s sugar importers have raised serious concerns over a proposed increase in the existing sugar import tax, warning it could lead to price surges, artificial shortages, and market instability.
The current tax stands at Rs. 50 per kilogram — a significant jump from the earlier 25 cents per kilo — and was originally introduced to protect local sugar producers like Pelawatte and Sevanagala.
However, importers argue that this rate is already high by global standards, and any further increase would only burden consumers and disrupt the market.
Importers stress that local sugar production is both limited and unsuitable for many industrial applications.
Locally produced brown sugar does not meet the standards required by industries such as confectionery, beverages, and baked goods, which rely on refined white sugar.
With domestic output accounting for only about 10% of the total sugar demand, imports remain critical to meet national consumption needs.
Currently, Sri Lanka imports roughly 60,000 metric tons of sugar each month, generating around Rs. 3 billion in revenue through the current tax regime. Importers warn that a proposed increase in the tax — possibly to Rs. 80 per kilo — would not only hike consumer prices but also allow large importers with stockpiles to reap windfall profits.
An increase of Rs. 30 per kilo would provide these importers, who reportedly hold around 60,000 metric tons in storage, with an estimated Rs. 1.8 billion in extra profit without any additional costs.
Small and medium-scale importers, who lack the capacity to store large volumes and are awaiting new shipments, say they would be severely disadvantaged.
These smaller players argue they cannot compete with larger firms’ pricing strategies and warn that the imbalance would lead to monopolistic practices and further distort the market.
Importers also emphasize that higher taxes will inevitably be passed down to consumers, affecting the cost of essential goods such as tea, sweets, beverages, and bakery products. This would be especially difficult for low-income families, for whom sugar remains a staple in the daily diet.
In light of these concerns, sugar importers have appealed to President and Finance Minister Anura Kumara Dissanayake to reconsider any increase in the import tax.
They argue that such a move would trigger artificial shortages, manipulate market pricing, and place unnecessary pressure on the general public — all while benefiting only a handful of powerful stakeholders.
Ultimately, importers are urging the government to maintain the current tax rate and focus on ensuring fair competition and stable supply, rather than creating an environment that disproportionately favors large importers and jeopardizes affordability for ordinary citizens.
