News
Excise Department grapples with billions of rupees in lost tax revenue

Due to ban on liquor sales during travel restrictions
by Suresh Perera
The continued prohibition on liquor sales due to existing travel restrictions in the country has dealt a crippling blow to the Excise Department with the loss of tax revenue exceeding a whopping Rs. 10 billion (Rs. 10,000 million) so far.
“We have been deprived of around Rs. 600 million per day in excise duties”, says M. J. Gunasiri, Commissioner-General of Excise.
Since the sale of alcohol was banned with the indefinite closure of all licensed liquor sales outlets (commonly called ‘wine stores), taverns, clubs and hotels on May 21, 2021, the loss in terms of tax income to the Excise Department for the past 18 days (up to June 8) has shot up to more than Rs. 10 billion, he said.
Excise tax on alcoholic beverages is a key source of government income, accounting for around 7% of tax revenue. The Treasury reported tax revenues of 944.4 billion for the seven months in 2019 up from Rs. 670.4 billion in the corresponding period the previous year, according to latest figures available.
Asked about the loss of tax revenue from tobacco sales, Gunasiri said the income earned by the Excise Department from this segment is marginal as the Finance Ministry absorbs the bulk of it.
“We have garnered only Rs. 35 million from tobacco sales so far this year”, he said.
With legal alcoholic beverages shut out, the illicit hooch business is thriving, the Excise Department chief remarked. “Some people have even resorted to distilling spirits at home”.
This is a dangerous trend as the illegal brew can even poison tipplers due to lack of standardization, he cautioned. “People should not jeopardize their lives by drinking such unsafe concoctions”.
Asked whether legal booze cannot be allowed to be ordered online for home delivery on a restricted basis to overcome the problem of risky ‘home-made alcohol’ to some extent, Gunasiri opined that sales cannot be done selectively.
“Such a move will also come under heavy flak though it’s fact that the illicit moonshine trade is cashing in on the situation in a big way”, he pointed out.
With legally produced products no longer available, ‘kasippu’ (illicit hooch) distillers are having a field day, trade sources asserted. “With the police tied down to implementing Covid-19 related measures and enforcing travel restrictions, there’s hardly the time and space for raids to round them up”.
Local liquor was also available in the blackmarket at exorbitant prices – a 750ml bottle of Extra Special Arrack (commonly called ‘gal’), usually sold at Rs. 1,600, had spiked to Rs. 5,000 over the past few days. The pricing started at around Rs. 2,500 per bottle, but shot up as legal products remained out of bounds with the extension of the travel restrictions, the sources said.
The Excise Department subsequently sealed all liquor outlets in a bid to prevent the ‘leak’ of available stocks.
“It’s true that many people have turned to rotgut as there is no option”, Gunasiri said.
On Tuesday, the Excise Department granted permission to facilitate the sale of liquor in “Safe and Secure Level 1 Hotels” during the travel restrictions.
Asked what “Level 1 Hotels” meant, the Excise Department boss explained that they represented Tourist Board approved star class properties which accommodate foreign visitors.
There are foreigners arriving in Sri Lanka under air transport bubbles and they can be served liquor if they are in-house guests of a star class hotel, he elaborated.
“This does not mean that anybody can walk into the bar of a hotel coming under the specified category and consume liquor”, he clarified.
This facility was granted to give foreigners access to liquor during their stay in Sri Lanka, Gunasiri further said.
Asked for a clarification on the legally specified quantum of alcohol an individual can have in his possession in terms of the amended regulations, he outlined that its 7.5 litres of any brand of local liquor (ten 750ml bottles) and 80 litres of foreign liquor, irrespective of whether its whisky, gin, brandy, rum, vodka, beer etc. as long as they are imported products.
The specified quantities are strictly for personal use and cannot be sold to a third party, he stressed.
Gunasiri served as the Deputy Commissioner General of the Inland Revenue Department prior to his appointment to head the Excise Department.
News
FSP asks govt. to pull out of defence deal with India

The Frontline Socialist Party (FSP) yesterday demanded an immediate termination of what it called a “secretive and dangerous” defence agreement signed between Sri Lanka and India, during Indian Prime Minister Narendra Modi’s 05 April visit.
Addressing a press conference at the party’s headquarters in Nugegoda, FSP Education Secretary Pubudu Jagoda described the agreement as a “betrayal of the nation” and a “crime against the people,” urging the government to invoke Article 12 of the deal and exit it with the required three months’ notice.
Jagoda said the document, which surfaced on social media after being published by a news portal, appears to be the actual agreement signed between the two countries. “The government has not denied its authenticity. That silence is telling,” he said.
Jagoda added that the agreement bears the signatures of Sri Lanka’s Defence Ministry Secretary Sampath Thuiyakontha and Indian High Commissioner Santosh Jha.
“What’s most troubling,” Jagoda warned, “is that both governments attempted to keep the agreement under wraps. Unlike the 1987 Indo-Lanka Accord, which was made public with all annexures, this agreement was hidden from the people, and even now, we don’t know how many other agreements exist between India and Sri Lanka.”
Jagoda said that a Right to Information request made on 04 April was met with a reply from the President’s Office stating that it had no copies of the agreement—raising serious concerns about transparency, even at the highest level. “One could question whether the President has seen it because his office does not have it,” Jagoda said.
The 12-clause of agreement reportedly covers areas such as exchange and training of military personnel, defence industry collaboration, classified information protection, and military medical services, including battlefield healthcare and telemedicine.
Jagoda said the definition of “classified information” in Clause 7 was alarmingly broad. “It allows India to label virtually anything as secret. Even weapons or military assets transferred under this agreement cannot be revealed—not even after the agreement ends,” he said, citing Clause 7.3.
Clause 10 prohibits either country from taking disputes to international courts or involving third-party mediators. “It’s like asking a rabbit to negotiate with a tiger,” Jagoda quipped, drawing parallels to the complications of the 1987 accord, which eventually saw Indian peacekeeping troops refusing to leave until a change in the Indian government.
Jagoda accused the NPP-led government of hypocrisy, pointing out that the JVP, the main component of the current regime, had vehemently opposed Indo-Lanka Accord in 1987. “Now they’ve gone and signed an even more dangerous deal,” he said.
Citing Clause 12, which allows either party to withdraw with three months’ notice, the FSP called on the government to act immediately to exit the pact. “We urge the people to unite and defeat these underhanded, sovereignty-eroding deals. The FSP stands ready to lead that fight,” Jagoda said.
News
Police crush protest, arrest student activists

The police yesterday arrested a group of students, including the Convener of the Inter-University Students’ Federation (IUSF), Madushan Chandradith, during a protest held by the Allied Health Science Graduates’ Union in front of the Health Ministry yesterday.
The police obtained an order from Maligakanda Magistrate’s Court, earlier in the day, to prevent protesters from invading the Colombo Hospital Square and the Health Ministry.
News
Deshabandu faces misconduct probe on Monday

Inspector General of Police T.M.W. Deshabandu Tennakoon is set to face formal questioning on Monday (19 May) over serious allegations of misconduct and abuse of power, parliamentary sources said yesterday.
A special Committee appointed to investigate the claims will commence formal proceedings next week, following several rounds of preliminary discussions held within the parliamentary complex in recent weeks.
The IGP has been officially notified to appear before the Committee and is expected to face the inquiry for the first time at 2:00 PM in Committee Room No. 8.
The Committee, which met again on Thursday (15) to finalise arrangements, is investigating allegations that Tennakoon misused his official powers in a manner deemed severe and improper.
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