Thread by @DefaultLk

Ministry of Finance removed license requirements for imports and replaced it with a surcharge on the duties - as Sri Lanka struggles with both a rupee and dollar deficit. (1/5)

#EconomicCrisisLK #DefaultLK

The surcharge on import tax (customs duty) helps manage import demand while increasing revenue for the government - an attempt to hit 2 birds with 1 stone. (2/5)

However, there seems to be some misunderstanding of the tax increase. What has happened is that tax rate has been increased by say 100% (that is times two), not a new tax of 100% of value of import. (3/5)

For example, for a 100,000 refrigerator with a 15% duty that comes to 15,000, this now increases 100% to 30,000. Therefore, the total cost increases from 115,000 to 130,000 (4/5)

https://twitter.com/rangaba/status/1532010103825502208

Additionally, the relaxation in import restriction ties into a move away from a "license raj" system which would have had a greater chance for corruption. (5/5)