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Editorial

Booze, hooch and taxes

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Writing his chairman’s review in the latest annual report of the Distilleries Company of Sri Lanka PLC (DCSL), the country’s biggest liquor manufacturer, Mr. Harry Jayawardena warned that pure coconut arrack may soon be history. This prediction was based on the price of this super-taxed product, which has made it totally unaffordable to the consumer. Obviously Jayawardena is talking from the perspective of the manufacturer, but nobody would or could dispute his logic. People don’t drink kasippu out of choice. The price stick, freely used by all governments, has driven imbibers into the arms of the illicit hooch mudalalis. Gone are the days when ‘Pol’ and ‘Gal’ arrack was priced at ten and eight rupees a bottle respectively. Today a bottle of ‘Gal’ costs Rs. 1,600, ‘Pol’ Rs. 1,750 and if you want it double distilled, a bottle would set you back a cool 2,000 bucks.

‘Pol’ of course refers to coconut arrack while ‘Gal’ stood for what was produced out of potable alcohol obtained as a byproduct of the Gal Oya sugar industry. The word “byproduct” was a clear misnomer; the sugar industry, whether at Gal Oya, Pelwatte or wherever, has long been making more money out of the alcohol distilled from the sugar cane molasses than from the sugar itself. This was probably why a previous government took over the listed Pelwatte Sugar Manufacturing Company established to help the country to be self-sufficient in sugar. While a private sector chairman of Pelwatte pre-takeover freely admitted that the company made more money from its alcohol byproduct that from its sugar, where the alcohol Pelwatte produces goes now is anybody’s guess. The budget debate would have been an opportunity to ask that question and get a very useful answer; but that did not happen.

We are writing this in the context of what emerged during the budget debate which ended on Thursday after 20 days of sound and fury with the predictably comfortable passage of Budget 2021. There was a lot discussion there about “artificial toddy,” something that Harry Jayawardena too has been talking about for many years. Matara District MP Buddhika Pathirana (SJB) estimated state coffers were being robbed of as much as Rs. 80 billion in excise revenue by artificial toddy manufacturers exploiting loopholes in the law. Pathirana says that the artificial toddy industry is rooted in the southern coastal area where a cocktail of urea, ammonia, nickel-cadmium from old cell phone batteries and sugar is used in a lethal brew.

He explained that the extent of the problem can be gauged with some simple arithmetic. Apparently only about one and a half liters or toddy can be had from a single coconut palm. Adding up the number of trees tapped and the volumes offered to distilleries, Pathirana estimates a discrepancy of 60-70,000 liters. Dangerously, it’s not only imbibers choosing to down rotgut with the attendant health implications, but also ordinary householders buying what they think is coconut vinegar who are at risk, he has pointed out. The Excise Department is well aware of the existence of this artificial toddy racket, which is a continuing one, although it does not agree that the Rs. 80 billion revenue loss that is alleged is accurate.

DCSL which took over the assets of its state-owned predecessor, the Distilleries Corporation during the Premadasa administration, when the government arrack monopoly (or near monopoly) was ended has long been conscious of the fact that it is a player in a so-called ‘sin industry.’ It has from the time of its first chairman, former Civil Servant V.P. (Totsy) Vittachi, been diversifying into various other businesses. Given that over 90% of what you pay for a bottle of arrack (or a single cigarette for that matter) are taxes the manufacturers are collecting for the government, and the payments to the state are not instantly made, a massive cash tranche is available to them to make other investments. This DCSL has cleverly done over the years, and its holding company, Melstar, is a highly diversified conglomerate into a variety of businesses. Ceylon Tobacco Company (CTC) has not done likewise to the extent of DCSL although it once diversified into insurance like its parent, British American Tobacco. However CTC pays its tax collection to the Treasury on a weekly basis. We do not know how it works where DCSL is concerned.

State Minister Nivard Cabraal who is the virtual Deputy Minister if Finance (the Prime Minister holds the finance portfolio) has called for a report from the Excise Department and the Secretary to the Treasury on matters that emerged in Parliament during the discussion. He acknowledged Pathirana’s useful contribution to the debate and assured follow-up on matters raised. The hard liquor industry has not only been a substantial source of government revenue, but had also produced many millionaires in this country. Arrack has made fortunes for different entrepreneurs from the Dutch and British colonial era when so-called arrack renting was a lucrative business. There has been generous philanthropy arising from such fortunes with, for example, the founding of Visakha Vidyalaya by Mrs. Jeramias Dias (Selestina Rodrigo) of Panadura. Ironically, Arthur V. Dias (popularly known as Kos Mama because of his campaign to plant jak trees), the son of Jeramias Dias, became a leader of the temperance movement at a later time.

It is common knowledge that the illicit liquor industry rampant in the country not only costs the government desperately needed revenue but also is at the root of corruption in the various enforcement agencies. Political patronage to this menace has been freely alleged over the years as have similar allegations with regard to narcotics. Prohibition has not proved a success wherever it was attempted. Government must necessarily balance competing interests including revenue, the cost of alcohol related disease to the healthcare system, the damage drunkenness causes innumerable families and many more in designing its alcohol policies. There’s a lot wrong with what prevails – artificial toddy is just one aspect.



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Editorial

The gravy train

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The ongoing Committee Stage of the Budget 2025 debate due to end on March 25 has elicited some, if we may call it that, salacious information of the spending habits of functionaries of the previous regime. While the public was not unaware of the fact that the political hierarchies of successive governments in office lavished tax rupees on themselves, a trend that unfortunately kept growing from regime to regime post-Independence, there was no focus of how badly the situation had deteriorated until some telling figures were presented to parliament during the current budget debate when the spotlight was shone, among others, on the former speaker, Mahinda Yapa Abeywardene.

The first volley was fired when some figures on food costs at the speaker’s official residence was revealed. This indicated that Rs. 2.6 million had been spent on food at the speaker’s official residence in 2023 and Rs. 3.2 million on this account the following year. In a strong rebuttal that out stablemate, The Island, headlined “Ex-Speaker lambastes NPP Leader of the House”, Abeywardene denied that he had spent government funds for his personal meals saying that official expenditure incurred entertaining foreign diplomats and visitors had been lumped together to give the people the impression that he was eating off the tax exchequer. The former speaker’s statement might have struck a responsive chord in the public mind had it not been well known that many of his family members had been recruited to his personal and parliament staff following his assumption of office. Some had accompanied him on visits abroad.

Further figures were thereafter presented on the transport expenses of the former speaker, his deputy and the deputy chairman of committees. Leader of the House Bimal Rathnayake revealed that between Jan. 1, 2024 and Sept. 24, 2024, Abeywardene had used six vehicles with a fuel cost of Rs. 33.34 million over a period of nine months. The former deputy speaker had used six vehicles incurring a fuel cost of Rs. 13.5 million and the former deputy chairman of committees four vehicles burning fuel costing Rs. 7.2 million. There is no doubt that ex facie such expenditure is excessive and cannot be defended on any grounds. But also, as the former speaker has said, he is entitled by virtue of the office he holds to his own vehicle and two escort vehicles “as Prime Minister Harini Amarasuriya has found out for herself.” Abeywardene has further claimed that the expenses revealed were “statistically impossible” and invited investigative journalists using the Right to Information Act to find out what was spent on his account not only in 2023 and 2024 but also from 2020 when he assumed office as speaker.

Quite apart from the former speaker, the government seized the opportunity of flaunting details of public funds spent on the foreign travel of former presidents with Mahinda Rajapaksa spending some Rs. 3.6 billion between 2010 and 2014; Maithripala Sirisena Rs. 384 million between 2025 and 2029; Gotabaya Rajapaksa Rs. 126 million between 2029 and 2022 and Ranil Wickremesinghe who among other overseas visits attended the funerals of Queen Elizabeth and the Japanese Emperor as well as King Charles’ coronation spending Rs. 533 million. In contrast, incumbent Anura Kumara Dissanayake had spent just Rs. 1.8 million on three foreign trips since he assumed office in Sept. 2024, two of his air tickets being paid by the hosts. Government has also said that Dissanayake had returned unspent per diem allowances paid to him. In that context older readers may remember that Mrs. Bandaranaike as prime minister flew economy class to the consternation of host waiting to welcome her at the foot of the business class exit.

Apart from these there have been revelation of the of the big bucks paid to politicians whose homes and offices were destroyed by mobs at the tail-end of the aragalaya. It has been pointed out that sums running to over Rs. 1.2 billion had been paid to 43 MPs ranging from a relatively modest half million rupees to over Rs. 90 million. Other politicians too, at local government level, have been compensated. This appears to have been done in a hush hush manner with details, including the names of the beneficiaries and what was paid to them emerging only earlier this year. It has been pointed out that the maximum compensation payable to people who have lost their homes in natural disasters is Rs. 1.5 million. After the 1983 riots, the government set up a body called Rehabilitation of Industrial Property Authority (REPIA) to compensate riot victims but payments were relatively low. Over and above that, the media is repleted with stories of the vast amounts spent on former resident Mahinda Rajapaksa’s Colombo residence.

Such to-ing and fro-ing is inevitably the nature of politics. So the former speaker cannot be faulted for taking a side swipe at the current regime by saying that while it presents itself today as a guardian of public funds, the history of the JVP demonstrates that it was responsible for destroying billions of rupees worth of public property during its two insurrections in 1971 and 1988-89. While all this is true, there appears to be a serious effort by the current dispensation to curtail unconscionable benefits enjoyed by politicians. Already MPs must pay realistically for what they eat at the once highly subsidized parliament restaurant and it has been promised that their pensions after a mere five years service are on the way out. Privileges accorded to former presidents too are being trimmed. All to the good.

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Editorial

They come, they shoot, they vanish

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Saturday 15th March, 2025

There seems to be no end in sight to the ongoing crime wave. Hardly a day passes without an underworld shooting incident reported from some part of the country. The government and the police boast of special operations to neutralize organized criminal groups, but underworld hitmen continue to strike at will.

The latest victim of gun violence is a former prison officer. He was shot dead at his home on Poya Day (13 March). Sridath Dhammika, 61, had served as a Superintendent at the Boossa high security prison before retiring last year.

Dhammika’s killer had not been arrested at the time of writing, and therefore his motive was not known. However, there is reason to believe that the shooter or the person who ordered the killing settled an old score. Underworld characters never forget or forgive their enemies or even those who defy their orders. Prison officers are an endangered breed, especially those who serve in high security jails. In February 2017, an underworld attack on a prison bus left five inmates and two jailers dead in Kalutara.

A large number of powerful crime czars have been held in the Boosa prison over the years. Although these criminals are behind bars, their crime syndicates continue to operate and silence witnesses. Their power is such that in 2020, while being detained in the Boossa Prison, a much-feared underworld figure named Arumahandi Janith Madushanka Silva alias Podi Lassi, and two other underworld characters known as Kosgoda Tharaka and Pitigala Keuma threatened to harm the then President Gotabaya Rajapaksa, Defence Secretary General Kamal Gunaratne, and some senior prison officers. They had the audacity to claim that although they were in jail, their hit squads were active and capable of eliminating anyone.

Podi Lassi, charged with possession of narcotics, was released on bail in December 2024. Lawyers who appeared for him told reporters, after his release, that he needed protection because the STF had threatened him with death. We pointed out in an editorial comment that they had craftily left unsaid that their client issued threats to a Head of State and a Defence Secretary. Everybody knew Podi Lassie would flee the country after being bailed out, and he did. Thankfully, he was arrested in India. This is what happens when criminals are granted bail. The Army deserter who sexually assaulted a doctor at the Anuradhapura Teaching Hospital on Tuesday had been granted bail earlier in the day.

Dhammika’s killing is sure to send a chilling message to the prison officer fraternity unless it is found to have nothing to do with the victim’s former job. It is hoped that the police will be able to arrest the killer and establish the motive for the crime fast while leaving no stones unturned in their efforts to track down their missing ‘head’.

It behoves the government to stop concocting conspiracy theories about the rising crime wave and concentrate on devising ways and means of neutralising the netherworld of crime and ensuring public security. Gunmen come, they shoot, and they vanish.

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Editorial

Curiouser and curiouser!

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Friday 14th March, 2025

We have heard of power stations being retired when they outlive their efficiency and usefulness and/or become redundant or potentially dangerous. But Sri Lanka is planning to make some power plants take a break, as it were, during the weekends. It has been alleged that a plan is underway to curtail renewable power generation during the weekends because the grid infrastructure cannot handle excess power, especially on Sundays, when there is a lower demand for electricity.

Earlier, the CEB was complaining of a shortfall in power supply, and now it is grumbling about excess power generation.

The National Electricity Consumers’ Association has written to the Public Utilities Commission of Sri Lanka (PUCSL), seeking the latter’s intervention to prevent the Ceylon Electricity Board (CEB) from causing a grave injustice to the producers of renewable power. It has alleged a sinister plan to boost thermal power generation, which is not only more expensive but also highly injurious to people’s health. It has called for a probe into the alleged move, which, it says, will be a body blow for renewable power generation—the cornerstone of the future power and energy landscape. The power sector is in the clutches of several Mafias, which are not well-disposed towards renewable power generation for obvious reasons. The NPP government was expected to clean up the power and energy sectors, but it, too, is moving along the same rut as its predecessors, whose leaders were accused of lining their pockets at the expense of the public.

Last month’s nationwide power outage, which left the government and the CEB groping in the dark, was first blamed on a monkey and subsequently on excess solar power generation on Sundays. The poor monkey which came into contact with a transformer at a CEB substation in Panadura and perished became internationally known posthumously thanks to the government’s absurd claim!

Now, there is an alleged move to discourage solar and hydro power generation during the weekends. The NPP came to power, pledging to end what it called a 76-year curse that had troubled the country since Independence. Has the so-called curse been renewed under the current administration?

The government and the CEB have not responded to the aforesaid allegation, and their side of the story should be heard. It is hoped that they will provide a clarification without further delay. Their silence will only lend credence to their critics’ claims. The alleged move to reduce renewable power generation during the weekends, in our book, is a solution like the harebrained ones legendary Mahadenamutta (a nitwit posing as a pundit) offered to the problems he was requested to solve.

When a goat had its head stuck in a pot, Mahadenamutta got the animal beheaded first in a bid to save the clay vessel, which was then smashed, at his behest, to extricate the caprine head! One can only hope that Sri Lanka’s power sector will not suffer the same fate as the proverbial goat. Successive governments have had in their ranks many Mahadenamuttas. The current dispensation is no exception; some of its members are at the butt end of social media jokes, having measured power output in ‘tons’ and speed ‘in light years’!

Curiously, Indian Prime Minister Narendra Modi is scheduled to attend a ground-breaking ceremony for the construction of a solar power plant in Sampur, during his Sri Lanka visit, early next month. A layman is at a loss to understand why any more solar power projects should be launched if the national grid cannot cope with an increase in renewable power. Will the new power plant to be built also have to idle during the weekends? The government owes an explanation.

There has been a proposal for introducing lower tariffs for power consumed during the weekends to encourage factories, etc., to operate on Saturdays and Sunday, thereby reducing the country’s demand for electricity on other days and helping curtail the expensive thermal power generation. The government should give serious thought to implementing this proposal.

Power corrupts, whether political or otherwise. The PUCSL should launch a stakeholder feedback initiative to consult all those engaged in the power sector, as well as independent experts, on how to increase the renewable power generation and upgrade the grid. The NPP government should launch a power sector clean-up under its Clean Sri Lanka initiative if it is not to be bracketed with its corrupt predecessors.

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