The Committee on Public Finance (COPF) has said that the International Monetary Fund (IMF) has stated the facts in its investigative reports asking Sri Lanka to remove the ‘Midnight Gazette’ due to the increasing corruption.
The committee has also issued an order to the Finance Ministry officials to levy income tax on companies that misuse the ‘Midnight Gazette’ to make ‘super profits’ as compensation for the lost revenue.
Thus, the committee has tasked the officials to prepare and implement a mechanism to recover these taxes or, if unable to do so, to provide detailed reasons why, and to suggest remedies to prevent such incidents in the future.
The seriousness of the existing situation became clear when the Public Finance Committee received the essential data related to the import of sugar for the last three months from the Customs Department.
The committee has questioned Finance Ministry officials about the questionable timing of the tax hike and the increase in sugar imports by certain companies just before the tax hike.
In response, finance ministry officials said the tax hike was part of the fiscal-based revenue consolidation program linked to an IMF initiative.
Furthermore, they have emphasized that the sudden increase in sugar import is due to the festive season.
The committee has asked the officials present to provide an analysis of previous years’ data to confirm these claims.
The committee was alerted to specific companies importing unusually large quantities of sugar without concrete evidence proving the need for such massive imports.
A company that normally imports 2,000 metric tons of sugar monthly had imported 10,000 metric tons in October just before the tax hike.
With the sugar tax increasing 200 times from 25 cents to 50 rupees, making a significant profit.
Chairman (Dr.) Harsha de Silva emphasized the importance of ending the use of ‘Midnight Gazette’ related to special merchandise tax.
He also pointed out that the Finance Minister will be given unexamined power to change tax rates or exempt tax for specific companies under these circumstances.
