A Tsunami of Tax Revenue

Julian Sanchez | June 17, 2005

When Oxfam began sending in relief vehicles to Sri Lanka to help with post-tsunami reconstruction (none were manufactured locally), the government understandably waived import duties... for the first four months. But now:

Britain's Daily Telegraph said Sri Lankan customs had charged $5,000 a day while the vehicles were processed.

Oxfam was given the choice of handing over the vehicles to the government, re-exporting them or paying the 300% import tax.

Comments

|6.17.05 @ 12:29PM|#

File under: It's official, beggers can be choosers.

|6.17.05 @ 12:35PM|#

Er, beggars.

|6.17.05 @ 1:06PM|#

Didn't the original Band-aid run into this problem in Ethiopia? If I can recall from my HS econ class when we looked at its problems: the ethiopian govt taxed the imported food aid, refused to give transport, taxed and then demanded ownership of the subsequent truck imports, and then would only let them go as far as central Ethiopia to distribute (the worst of the famine was in the south) lest the rebels get ahold of the food and trucks. Damn those gift horses.

In other news, at least the Sri Lankan govt is going to share the tsunami aid with the Tamil Tigers. I'm sure they'll put the funds to good use.

Remember, when you donate to charity, the terrorists win.

|6.17.05 @ 1:47PM|#

The thing is, this tariff cannot even be justified by protectionism since, as the article expressly notes, Sri Lanka has NO FREAKIN' DOMESTIC MOTOR VEHICLE INDUSTRY!!! Sheesh!!

|6.17.05 @ 2:15PM|#

I hope you learned your lesson, Lisa. Never help anyone.

-Homer Simpson

|6.17.05 @ 2:27PM|#

Homer has the right of it...

|6.17.05 @ 2:54PM|#

Reminds me of the story I heard (no idea as to veracity) about the building of the Meadowlands in NJ.

Preliminary tests revealed massive concentrations of mercury in the soil from nearby factories (NJ does have mercury contents from the pharmaceuticals, which used mercury in an anti-microbial for liquids and gels). So the government, looking to build a safe sporting facility, sends out for bids for remediation.

Surprise! The National Spanish Mining Company says we'll do it for FREE, if you let them keep the mercury they recover. NJ ecstatic, and negotiations begin to take off like a rocket. Almost all the i s are dotted and t s crossed when NSMC says they don't want to pay employer's share of income tax for work done on site.

Needless to say, this was a dealbreaker for NJ, which decided that just paving over everything for several acres would be just as good.

|6.17.05 @ 3:03PM|#

From the article:

...the aid had been duty-free until the end of April but was now needed to prevent "market distortions."

Yeah right - more like tariffs are needed to "prevent distortion" of the inept government's effort to keep the Sri Lankan people poor.

|6.17.05 @ 3:10PM|#

....employer's share of income tax.... - quasibill

What is that supposed to be, the employer's half of the Social Security tax (FICA)?

Kevin

|6.17.05 @ 3:38PM|#

SR,

No doubt the Sri Lankan government would counter that the fact that they have no domestic industry must mean that the tarrif is too low ... :)

PintofStout|6.17.05 @ 4:07PM|#

Just another commerce clause argument; I don't know what everyone is bitching about.

|6.17.05 @ 4:37PM|#

tarran, ah yes, thank you , I see now. If only the Sri Lankan government would ban all imports of motor vehicles, Colombo could be the next Detroit.

|6.18.05 @ 12:20AM|#

The percentage of the tax may seem unreasonable, but the reason for taxation is to force the NGO to use local resources. This not only applies to vehicles, but also manpower and building materials.

Now, in terms of the vehicles...SL has NO shortfall of 4X4 vehicles and other heavy utlizity machines that can be easily rented. The rental fees are quite reasonable and these machines are widely available. I rented a Pajero Jeep (Mitsubishi Montero) in SL for 22000 per/month, thats about 250$!!!!!!!

Anyway, the country has vehicles, and goods have been transported for many decades prior to the Tsunami and even after the Tsunami. So I truly wonder why OXFAM bought these vehicles and who made the commission??????? :)

SA
Toronto CA

|6.18.05 @ 3:40PM|#

Charity is profitable business

It is sad to note how many ignorant readers blindly believe that all their donations to charity organizations really end up as help to the people in effected.

In reality, usually only 50-60% of the collected money ever leaves the walls of these organizations and gets distributed to the affected people ?the other part the organization uses it self. This is a big and very profitable business. Even by buying 25 vehicles here and sending over there, one can make a hefty profit out of your charity money. But, why cry foul when they have to divide the profits. Trying to defame the Sri Lankan government is pathetic.
By the way, the Sri Lankan government still haven't touched over US$4 billion Tsunami aid pledged to that country.

|6.18.05 @ 4:26PM|#

Trying to defame the Sri Lankan government is pathetic.

The Sri Lankan government defames itself by keeping Sri Lankans poor in a modern world which, as Ron Bailey pointed out in this very good article a while back, Poor Planning: How to achieve the miracle of poverty, takes effort. Trade is good for both sides and the only road out of poverty for the third world (and yes, unfortunately many charities often do less good for the intended beneficiaries than for themselves, but that is irrelevant to the point about poor governance). By defending third world policies that, like tariffs, restrict trade, you are defending those that perpetuate poverty. Now that is pathetic.

|6.19.05 @ 12:53PM|#

To the comment by: Brian Courts

It is absurd to use the yardstick of per capita GDP figures alone (as Ron Bailey points out) to decide if a country is rich or poor. In USA and many European countries a fair number of people live in poverty.

If you compare UNDP's country data you would see that Sri Lanka's populations' life expectancy, child deaths rate, literacy and many other aspects show much better figures than even some European countries. The WHO commissioners have commended the efficiency of the well-organized health system in managing the Tsunami crisis. Even by pc literacy and IT penetration Sri Lanka is ranked at 36th in the world.

If a government has managed to make achievements in the social sector by improving the level of wellbeing and advancement among the population, this, in spite of all the economic devastations caused by over 20 years of civil war - then that is good governance!

Other than the continuing wars, unfortunately, in many cases, some rich countries create obstacles for the development of 'poor' countries as well: by way of sponsoring civil wars, creating internal political strife, various trade regulations etc.

My point was that all the countries in the world use trade tariffs, trade restrictions etc to protect something or other ( even ecology). And in Sri Lanka duties regarding the import of heavy vehicles was there before the Tsunami. The government had given a 4 months tariff free period after the Tsunami. Charities cannot be allowed to play havoc in countries; they should learn to obey and account for the rules known in advance.

It is now known that a lot of charities are careless in their work. Perhaps, The biggest recent scandal being when Red Cross in Canada pleaded guilty to distributing blood contaminated with HIV and hepatitis C. This mismanagement by an international charity organization killed over 3000 people and infected over 20,000 in Canada.

A convicted US child-molester was only recently found running a charitable children?s orphanage in Sri Lanka!!

|6.19.05 @ 1:32PM|#

It is now known that a lot of charities are careless in their work. Perhaps, The biggest recent scandal being when Red Cross in Canada pleaded guilty to distributing blood contaminated with HIV and hepatitis C. This mismanagement by an international charity organization killed over 3000 people and infected over 20,000 in Canada.

well, at least they have the Canadian health care system to help them out.

A convicted US child-molester was only recently found running a charitable children?s orphanage in Sri Lanka!!

Well, you can't argue that he doesn't love children...