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
Opposition trade union meets AKD’s reps, flays CEB
Controversy over delay in granting relief to electricity consumers:
by Shamindra Ferdinando
Convener of the SJB’s trade union wing, Ananda Palitha, has said that the country expected President Anura Kumara Dissanayake’s intervention to ensure that consumers received the immediate benefit of a downward electricity tariffs revision, which was long overdue.
Palitha told The Island that as NPP leader Dissanayake had assured the public in the run-up to the presidential election (21 Sept.) and, thereafter, an electricity tariff reduction, and the vast majority of electricity consumers had expected 30% to 35% downward tariff revision.
Palitha emphasised that it was up to President Dissanayake to prevent the Ceylon Electricity Board (CEB) from depriving consumers of relief. The President couldn’t go back on his election promise to reduce monthly electricity bills of Rs. 3,000 and Rs 6,000 by Rs. 1,000 and Rs. 3,000, respectively, Palitha said.
Asked whether the trade union intended to campaign for tariff reduction, Palitha said that they had taken the issue with Director General and Deputy Director General of the Public Utilities Commission of Sri Lanka (PUCSL) on 01 Nov. and subsequently written to President Dissanayake seeking his intervention.
The trade unionist said that in spite of the change of government the CEB seemed to be determined not to mend its ways. Having repeatedly assured the country of a much-touted system change, the ruling party must not allow the CEB to have its way in dealing with electricity consumers.
Palitha alleged that the CEB had deliberately delayed the submission of its tariff proposals to the PUCSL.
Responding to another question, Palitha said their trade union collective had received an opportunity to make a comprehensive presentation on behalf of electricity consumers to President Dissanayake’s senior aides at the Presidential Secretariat on 06 Dec.
“We explained how the top CEB management, particularly influential engineers, manipulated the whole pricing process to their advantage at the expense of the people struggling to make ends meet,” Palitha said, adding he hoped that the presidential aides had realized the gravity of the developing situation, particularly as within hours after their meeting the country was told anticipated tariff revision couldn’t be granted.
“How could the CEB declare that the tariff revision couldn’t be implemented after having offered 6% to 11% tariff reduction just a couple of weeks ago?” Palitha said. The incumbent political leadership couldn’t absolve itself of the responsibility for ensuring the CEB adhered to a Cabinet decision taken during the previous administration that there would be four tariff revisions yearly.
Palitha disclosed that the SJB trade unions had taken up with the President’s team Trade, Commerce, Food Security and Cooperative Development Minister Wasantha Samarasinghe’s recent declaration that electricity consumers would be given a 30% tariff reduction over a period of three years whereas his leader had promised immediate relief.
Regardless of the CEB’s recommendations, the final decision in respect of electricity tariffs would be taken by the PUC, Palitha said, urging the NPP representatives to speak in one voice.
Palitha mentioned that both the government and the CEB owed an explanation to the public regarding the sudden declaration made by the latter that tariff reduction couldn’t be made as the government trade union leader at the CEB, Ranjan Jayalal, had disclosed on a live television debate the CEB earned Rs 62 bn profits in 2023 and so far Rs 142 bn this year. Jayalal made the declaration in support of his demand for thumping year-end bonuses for CEB employees, Palitha said, declaring providing relief to consumers should be the government’s priority.
Palitha said that Dissanayake who had been at the helm of the JVP since 2014 couldn’t be unaware how their union and other interested parties won their demands at the expense of not only the consumers but the entire country as well.
The SJB representative said that the country was yet to receive the benefit of the bulk of electricity being generated through hydro power.
News
SLMC calls for probe into agreement signed with bondholders, others ahead of presidential election
Sri Lanka Muslim Congress (SLMC) leader Rauf Hakeem, MP, demands to know why the Rajapaksa-Wickremesinghe government entered into an agreement with bondholders and commercial creditors just 48 hours before the presidential election.
MP Hakeem told The Island that he raised the issue at hand in Parliament last week when Parliament deliberated the Vote-on-Account. He drew the attention of Parliament to what he called a matter of critical importance related to Sri Lanka’s recent debt restructuring. The SLMC leader said: “While it is undeniable that reaching an agreement with bondholders and commercial creditors was crucial to steering our nation out of its economic crisis, troubling questions linger about the integrity of this process.
It is concerning that the agreement with bondholders was finalised merely two days before the Presidential elections, raising doubts about whether this, too, was exploited to serve the interests of a select few. We are reminded of the controversial $500 million bond repayment saga during the Rajapaksa administration. Similarly, the current restructuring raises the specter of insider trading—where investors, potentially armed with privileged information, acquired Sri Lankan bonds at deep discounts, only to negotiate settlements at face value, possibly in collusion with the administration.
This Parliament owes it to the people of Sri Lanka to demand transparency and accountability by initiating an independent inquiry to determine the purchase prices of these bonds, the extent of concessions offered, and whether public trust was compromised in favour of private gain. Another matter of profound national importance—the Domestic Debt Optimization (DDO) initiative, which I contend represents Sri Lanka’s third and most extensive bond scandal. This scheme, orchestrated under the stewardship of then-Finance Minister Ranil Wickremesinghe, mirrors the malfeasance of previous bond scams and inflicts severe economic injustice upon our working class.
In February 2015, the Central Bank of Sri Lanka (CBSL) was embroiled in a bond scandal involving the issuance of Rs. 1 billion in 30-year government bonds. The auction controversially accepted bids totaling Rs. 10 billion, significantly exceeding the initial offer, leading to an estimated loss of over $11 million for the nation. This incident, among others, has eroded public trust in our financial institutions.
The DDO was presented as a strategy to reduce the government’s liability to the public. However, a critical examination reveals a more sinister agenda. The Employees’ Provident Fund (EPF), the primary retirement savings of our private-sector employees, was compelled to exchange its Treasury bonds under the DDO programme
This maneuver effectively transferred substantial wealth from the EPF to a select group of beneficiaries, including: Licensed Primary Dealers, · Licensed Commercial Banks and· Non-Bank Financial Institutions
The exact magnitude of the windfall gains reaped by these entities remains undisclosed, raising serious concerns about transparency and accountability.
Calling for independent inquiry, MP Hakeem said: It is imperative that an independent investigation be conducted to: (i) Quantify the Wealth Transfer: Determine the total value siphoned from the working population’s retirement funds to the affluent few (ii) Assess Tax Revenue: Ascertain the amount of tax revenue the government accrued from these windfall profits.
Such an inquiry is essential to uphold justice and restore public confidence in our financial governance, the former Minister said.
News
CID still probing Rs. 5 mn missing from CB
By Norman Palihawadana
Newly appointed Director, Criminal Investigation Department (CID), SSP Imesha Muthumala, yesterday (08) said that inquiries were continuing into the disappearance of Rs 5 mn from the Central Bank, reported on April 11, 2023.
SSP Muthumala said that the truth could emerge at any moment.
The Central Bank is on record as having said that a shortage of Rs.5 million worth cash bundle was discovered in one of its vaults during the currency operations on April 11, 2023. “An internal probe into the matter was commenced i m m e d i a t e l y, while a complaint was also lodged at the Fort Police Station. The Central Bank said that it took necessary measures to thoroughly investigate the incident and strengthen the internal controls, processes, etc. The Central Bank also assured that it would continue assisting the Police to carry out investigations.
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