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Government’s Inaction on Rs. 16 Billion Sugar Scam Profits Sparks Outrage Amidst Growing Tax Burden

By Madhuri Ranasinghe

The persistent silence of the current government over the recovery of a staggering Rs. 16 billion in
unjust profits amassed by seven importers in the infamous 2021 sugar tax scandal has ignited
public outrage. This flagrant oversight not only highlights a lack of accountability but also
compounds the burden on the public with newly imposed taxes. Consequently, a growing number
of Sri Lankan professionals are considering leaving the country, propelled by dwindling faith in the
government’s capacity to ensure justice and economic stability.
Earlier in 2023, concerning the recovery of losses from the alleged sugar tax scam in Sri Lanka in
2020, State Finance Minister Hon Ranjith Siyambalapitiya revealed a measured approach to the
restitution process. Siyambalapitiya addressed inquiries from The Island regarding the timeframe
for the government’s retrieval of 30 per cent of the Rs 16 billion revenue loss, as previously
pledged to Parliament prior to the Budget 2023 presentation. He noted that the recovery period
could extend beyond a year, contingent upon the accounting cycles of pertinent sugar importers.
Back in November 2020, MP Siyambalapitiya had informed Parliament about a staggering Rs 16
billion loss incurred by the Treasury due to an unprecedented reduction in duty on one kilogram of
white sugar—from Rs 50 to a mere 25 cents—beginning October 13, 2020. The State Minister
expressed confidence that the government would implement safeguards to prevent future
unilateral decisions of this nature. Notably, during this period, Mahinda Rajapaksa served as the
Prime Minister and Finance Minister, while Ajith Nivard Cabraal held the State Finance portfolio,
with S. R. Attygalle acting as the Treasury Secretary.
Recent Development at Committee on Public Finance (COPF)
During a recent session of the Committee on Public Finance, chaired by Hon. Patali Champika
Ranawaka due to the absence of Hon. (Dr.) Harsha de Silva, concerns were raised regarding the
government’s lack of action in recovering losses incurred from the Sugar Tax Scam in Sri Lanka.
The Ministry of Finance officials were questioned about their inaction, leading to the displeasure of
the committee. The committee also questioned why the Inland Revenue Department and the
Attorney General’s Office had not taken action on this matter yet. It was noted that there was a
pending case related to this issue. The committee explored the possibility of initiating action if the
relevant parties withdrew the pending case in court, and they urged the Attorney General’s
Department to provide immediate clarification on this concern.
Furthermore, the committee discussed issues related to regulations published in the Gazette under
the Imports and Exports Controls Act on wheat flour. The impact of these regulations on the
importation of wheat flour and the resultant impact on market dynamics, referred to as a “flour
duopoly,” was also brought up. Additionally, the committee approved the Appropriation
(Amendment) Bill 2023, which increases the borrowing limit and expenditure limits. State Minister
Hon. (Dr.) Suren Raghavan and various Members of Parliament were present during the
committee meeting. These proceedings shed light on the government’s response to the Sugar Tax
Scam and its wider implications for the nation’s financial and regulatory landscape.
The far-reaching implications of this inaction are palpable. As professionals across industries
grapple with heightened tax burdens and plummeting confidence in the government’s commitment
to accountability, many are considering relocating to more favourable destinations abroad. As a
result, Sri Lanka stands to lose a significant portion of its skilled workforce, intensifying the brain
drain phenomenon and exacerbating the challenges posed by a shrinking economy.
The ramifications extend beyond immediate financial concerns, as they call into question the
government’s fundamental role in ensuring transparency, justice, and economic progress. The
absence of substantial efforts to bring the culprits to justice raises concerns about the

government’s capability to manage public finances effectively and prevent such scandals from
recurring. Amidst a growing tide of disillusionment, professionals and citizens alike are questioning
their allegiance to a system that seems indifferent to their well-being.
While the consequences of the government’s inertia are grim, there remains a window of
opportunity to rectify the situation. Swift action to retrieve the Rs. 16 billion in illegitimate profits and
hold those accountable would not only restore faith in the system but also signal that Sri Lanka is
committed to upholding the rule of law and safeguarding the public’s interests. By demonstrating its
dedication to addressing corruption and economic imbalances, the government has the chance to
salvage its reputation, retain its skilled workforce, and foster an environment conducive to
sustainable growth.
In sum, the ongoing developments surrounding the sugar scam transcend mere financial
mismanagement; they touch upon the very core of governance and accountability. The
government’s failure to address this issue, coupled with the imposition of new taxes, underscores
the urgency of the situation. As Sri Lankan professionals contemplate their future amidst an
environment marred by corruption and economic instability, the government must make a
concerted effort to reestablish public trust and cultivate an atmosphere conducive to national
progress. Swift, decisive action is imperative to restore confidence and propel the nation toward a
brighter, more equitable future.