The Excise Company is battling billions of rupees in misplaced tax income – The Island

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The Excise Agency is battling billions of rupees in lost tax revenue - The Island

Due to the ban on selling spirits during the travel restrictions

by Suresh Perera

The ongoing ban on the sale of liquor due to existing travel restrictions in the country has dealt a crippling blow to the excise authority as tax revenues surpassed a whopping Rs. 10 billion (Rs. 10,000 million) so far.

“We were denied around Rs. 600 million excise duties per day, ”says MJ Gunasiri, General Commissioner for Excise Duties.

Since the sale of alcohol on the 21st 18 days (through June 8th) have skyrocketed to more than Rs. 10 billion, he said.

The excise tax on alcoholic beverages is an important source of income for the state and accounts for around 7% of tax revenue. The Treasury Department reported tax revenues of $ 944.4 billion for the seven months of 2019, up from Rs. 670.4 billion for the same period last year, according to the latest available figures.

When asked about the loss of tax revenue from tobacco sales, Gunasiri said the excise agency revenue from this segment is marginal as the Treasury Department receives most of it.

“We only have Rs. 35 million in tobacco sales so far this year,” he said.

With legal alcoholic beverages banned, the illegal business is booming, said the head of the excise agency. “Some people even distilled spirits at home”.

This is a dangerous trend as the illegal brew could even poison drinkers due to a lack of standardization, he warned. “People shouldn’t risk their lives by drinking such unsafe brews.”

When asked whether it was not allowed to order legal schnapps for home delivery online to a certain extent in order to overcome the problem of the risky “homemade alcohol”, Gunasiri said that the sale could not be selective.

“Such a move will also come under great pressure, although the illegal moonshine trade is taking advantage of the situation to a large extent,” he said.

With legally made products no longer available, “Kasippu” (illegal hooch) burners are having a big day, trade sources claimed. “Since the police are tied to the implementation of Covid-19-related measures and the enforcement of travel restrictions, there is hardly any time or space for raids to round them up.”

Local spirits were also available on the black market at exorbitant prices – a 750ml bottle of Extra Special Arrack (commonly known as a “gal”), which normally retails for Rs. 1,600, had Rs. 5,000 in the last few days. Prices started at around Rs. 2,500 per bottle but skyrocketed as legal products remained banned with the expansion of travel restrictions, the sources said.

The excise authorities then sealed all spirits outlets to prevent “leakage” of available stocks.

“It is true that many people have turned to Rotgut because there is no option,” said Gunasiri.

On Tuesday, the Excise Agency gave permission to facilitate the sale of spirits in “Safe and Secure Level 1 Hotels” during travel restrictions.

When asked what “Level 1 Hotels” meant, the head of the excise department stated that they represent tourist board-approved star-rated hotels that accept foreign visitors.

There are foreigners who arrive in Sri Lanka under air bubbles and they can be served schnapps if they are houseguests in a star hotel, he explained.

“That doesn’t mean that everyone can enter the bar of a hotel of the specified category and consume schnapps,” he clarified.

This facility was granted to give foreigners access to alcohol while in Sri Lanka, Gunasiri said.

When asked for clarification about the legal amount of alcohol a person may have in their possession in relation to the amended regulations, he noted that it was 7.5 liters of local liquor of each brand (ten 750 ml Bottles) and 80 liters of foreign spirits, regardless of whether they are whiskey, gin, brandy, rum, vodka, beer, etc. as long as they are imported products.

The stated quantities are intended solely for personal use and cannot be sold to third parties, he emphasized.

Gunasiri was the deputy commissioner general of the Inland Revenue Department prior to being appointed head of the Excise Department.