"Sugar Scam” is Not the Whole Iceberg: “Forestalling” Needs a Rule-of-Law Solution

Abstract

On 14 October 2020, taxes on imported sugar were slashed overnight from LKR 50 to LKR 25 cents per kilogram. That is a reduction of 99.5%. This led to much discussion in media and parliament about the large undue profits that accrued to those who had been primed in advance to keep large stocks ready to clear from customs soon after this reduction. This policy was reversed last week, but raised the exact same concerns in the opposite direction. The point of this article is not only to highlight these problem in economic governance but to suggest practical action that can contain not just the “sugar scam”, but the entire class of such problems that are draining government revenue in Sri Lanka. This problem has a name, it is called “forestalling”, and it can be tamed by legislation and regulations.