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Monday, June 17, 2024

Economic crimes: Sri Lanka has lost Rs. 20 billion as a result of the sugar scam under Gota

Image: Pyramid Wilmar (Pvt) Ltd–the private company accused of profiteering from the Government’s massive sugar tax cut–imported 1,222 percent more sugar than usual between October 2020 and February 2021, but did not pass the advantage to consumers, the National Audit Office (NAO) states.

In Sri Lanka, the phrase “sugar scam” refers to the scandal surrounding the sudden large reduction in the Special Commodity Levy (SCL) on sugar imports, which took place on 13 October 2020. The SCL on sugar was reduced by 99.5% from LKR 50/kg to LKR 0.25/kg. 

The popular allegation of the scandal is based on the observation that the SCL reduction did not result in a significant reduction in market price (see Exhibit 2). The allegation is that the resulting loss of revenue to government, instead of benefiting society, translated into an extraordinary private benefit to those who had cleared their sugar imports at a reduced rate relative to their competition. The opposition leader’s statement estimated this loss of government revenue at LKR 20 billion. 

To evaluate this claim FactCheck.lk consulted the Department of Customs and the Central Bank of Sri Lanka Monthly Economic Indicators. Exhibit 1 gives the quantity of sugar that was imported on a monthly basis and the consequent foregone government revenue. By end of March 2021, close to six months from the reduction, the foregone revenue adds up to the LKR 20 billion figure cited by the opposition leader. 

Therefore, we classify the opposition leader’s statement as TRUE. 

**FactCheck.lk’s verdict is based on the most recent information that is publicly accessible. As with every fact check, if new information becomes available, FactCheck.lk will revisit the assessment. 



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