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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.



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SJB MP slams police double standards



“Why one law for Ponnambalam and another for Gamage?”

The police have failed to display the same efficiency they displayed in arresting Jaffna District MP Gajendrakumar Ponnambalam with regard to arresting State Minister Diana Gamage, who should have been spending her time at the Mirihana Immigration Detention Centre, Kurunegala District SJB MP Nalin Bandara Jayamaha told Parliament on Friday.

“If the police had displayed the same efficacy, Diana Gamage should have been at the Mirihana Detention Centre at this time. Instead she comes to parliament and issues threats to other MPs. The courts have clearly stated that the CID could take her into custody because she had been using two passports.

“The Immigration Controller himself has reported to the courts that she had been a UK citizen since 2004 and using a UK passport since then. She has not revoked her UK citizenship. In addition she has obtained anther passport through the Secretary General of Parliament. The Speaker too should have a responsibility to prevent a foreign citizen sitting unlawfully in the House,” he said.

Jayamaha said that Gamage had no right to sit in parliament. “The case against her regarding her having forged passports is postponed again and again. The law is not implemented. My colleague Mujibur Rahuman tabled a document in this House that the Defence Secretary had been informed of the illegality of Gamage’s presence in Parliament. I tabled the same again today.

“She recently told a TV talk-show that she had applied for the revocation of her UK citizenship. We do not know whether she has two tongues,” the MP said.

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Sarath Weerasekera opposes SLT share sale on security grounds



Sri Lanka Telecom (SLT), which owns a fixed and mobile telecom group, which is partly foreign owned and listed should not be privatized, the head of a parliamentary committee on national security has said.

Government MP, Retd. Admiral Sarath Weerasekara who chairs the Sectoral Oversight Committee on National Security told parliament Friday that divestment of the 49.5 percent stake in SLT held by the government could “expose the country’s strategic communication infrastructure and sensitive information to private companies that are motivated by profit, which could pose a threat to national security”.

Weerasekara also said that any individual or organization proscribed or otherwise that “aided terrorists or extremists” must not be allowed to purchase shares or control Sri Lanka’s national assets.

The claim comes despite satellite links and international cables connecting the country being built and managed by foreign conglomerates in which many connected countries are also shareholders. SLT is also a shareholder in some global cable companies.

Weerasekara suggested that the government retain the right to repurchase shares held by the majority shareholder of SLT.SLT’s second biggest shareholder, behind the Sri Lanka government, is Malaysia-based Usaha Tegas Sdn Bhd with a 44.9 percents take in the company.

Most Sri Lanka’s mobile firms were also built and owned not just by private firm but foreign ones. SLT’s own mobile network, Mobitel was a build operate transfer project by Australia’s Telstra.

Sri Lanka’s cabinet of ministers in March 2023 listed Sri Lanka Telecom among several state companies to be re-structured.SLT currently enjoys market leadership in fixed-line services and is the second-largest operator in mobile. It also owns an extensive optical fibre network.The company was placed on watch for a possible rating upgrade by Fitch Ratings in March 2023 after the government announced the restructuring. (EconomyNext)

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Cardinal hits out at government demanding local elections



By Norman Palihawadane

Colombo Archbishop Malcolm Cardinal Ranjith has urged the government to hold local elections to secure the democratic rights of the people.

“Voting is a right of the people that we must all enjoy. It is a right that every person over 18 -years of age is entitled to to determine the future of the country,” he said on Thursday.

“Today justice as been turned into injustice, governance to dictatorship and law into lawlessness,” the 75-year-old cardinal told a gathering of hundreds of people at a function at St. Anthony’s College in Kochchikade.

Local polls to elect 340 councils were slated for April 25 but the election commission postponed it, citing a lack of funds.

“The government said earlier that it doesn’t have money to hold an election, now it’s saying that it has money. If the government has the money, please give an opportunity to the people to vote and let the people express their wishes. How much of what came from the IMF was used for agriculture? How much for the fishing industry? And what about education?” the cardinal queried.

Rather than improving the lives of people, “politicians import goods, and bring in what we need and what we don’t need, destroying our economic independence, leading us to depend on foreign countries,” he said.

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