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Illicit artificial toddy trade deprives govt. of Rs. 80 billion in revenue annually



State Minister promises remedial action

By Saman Indrajith

One of the topics that kept reverberating throughout the budget debate that ended in parliament last Wednesday was the drain of excise revenue as a result of loopholes in the tax net by artificial toddy manufacturing businessmen.

Various facets of the issue were raised by SJB Matara District MP Buddhika Pathirana during the question time on three separate days highlighting the severity of the damage inflicted on the national economy by tax evading toddy businessmen who deprive the government coffers of a whopping Rs. 80 billion annually.

Following the disclosure by MP Pathriana, State Minister of Money & Capital Market and State Enterprise Reforms Ajith Nivard Cabraal promised remedial action.

Commissioner-General of Excise, Ariyadasa Bodaragama, acknowledged that there exists a tax leakage but he was wary of the figure of Rs. 80 billion.

Bodaragama is due to retire at the end of the month. Deputy Commissioner-General of the Inland Revenue Department, M. J. Gunasiri has been named as his successor.

Challenges before Gunasiri, as the new Excise Commissioner-General, are enormous, and whether he would be able to help Minister Cabraal deliver on his promise remains to be seen.

As Gunasiri earlier served as Deputy Commissioner-General Tax Administration (Corporate Small Entities & Non Corporate Sector) at the Inland Revenue Department, his expertise may be useful to remedy the situation. However, he has only three more months of service before his retirement. Unless he is given a service extension, the task of finding solutions to the tax evasion issue raised by Pathirana will probably have to wait till another Commissioner-General is appointed.

Pathirana told The Sunday Island that the government coffer is bound to lose over Rs. 80 billion a year due to tax evasion by artificial toddy manufacturers and the ramifications to the national economy are more acute if the health cost is also taken into account.

“We have seen many instances of serious health problems that illicit brewers caused to the people. Artificial toddy is produced by mixing urea, ammonia, nickel cadmium of old batteries and sugar. This harmful brew is sold at liquor shops and used for manufacturing ‘coconut arrack’ and vinegar.

“Suppose we overlook tipplers who consume the toxic brew knowingly or unknowingly, what about innocent consumers who buy vinegar? In Sri Lankan food culture, vinegar is an integral part. Imagine the number of people who get ill because they consume vinegar made of artificial toddy,” the MP said.

“The artificial toddy industry is well-rooted in coastal areas in the south. If one checks the number of trees tapped and the number of liters of toddy being sold, it is a very simple calculation to understand how much artificial toddy is being consumed. Only around one and a half litres of toddy could be tapped from a single coconut palm. As per reports of coconut researchers, the amount could vary slightly due to factors such as climate, humidity and season. The amount being sold by license holders varies from the actual amount extracted from palms. A difference is in the region of 60,000-70,000 litres. So, it is obvious that toddy comes from other sources”, he noted.

There have been raids by police and STF but toddy businessmen continue to ply their trade because the police cannot take the culprits before courts as per Sections 49, 50 and 52 of the Excise Ordinance. They have to hand over the suspects and the equipment to excise officers, who most of the time do not produce the suspects in courts but release them after filing a Technical Crime Report (TCR), the parliamentarian further said.

“Under the TCR, the racketeers only have to pay a small sum by way of a composition fee. The TCR is actually one of the loopholes these businessmen get out so easily. I pointed out all these to the government. I hope Minister Cabraal will act as promised. I also pointed out to him that there are not only excise officers but some finance ministry officials who benefit from the artificial toddy business. I hope and pray that the minister will be able to remedy this situation,” Pathirana added.

President of the Nawa Sinhala Rawaya, Ven Magalkande Sudattha Thera said the illicit toddy industry is thriving despite isolated raids. The police and the STF conducted successful raids in many areas in the recent past. Thereafter, the police hand over the suspects and equipment to the Excise Department for legal action. Excise Department officials file a TCR and release them on a composition fee.

Many illicit toddy producers have licences for toddy tapping. So finding sugar, ammonia, yeast, batteries in toddy amounts to only a technical error; it becomes a technical crime if they suspect that the manufacturer had purposefully mixed them with toddy or produced toddy using them as ingredients. During a recent raid, the police found three bags containing 25 kilos of ammonia to be used to produce toddy. How could the government ensure public safety when poison is being sold in bottles in the name of toddy, the prelate asked.

President of the consumer watchdog National Movement for Consumer Rights Protection, Ranjith Withanage said that old mobile phone batteries were also being used in the fermentation process of artificial toddy.

He said a countrywide survey conducted by his organisation revealed that discarded mobile phone batteries and power banks and chemicals such as urea were used to produce artificial toddy.

 “We have information that such toddy is being sold to produce coconut arrack and vinegar.  Arrack and vinegar made from artificial toddy were sold in the market while those responsible for preventing consumers from such harmful products have done nothing so far to raid shops and places that sold them”, he asserted.

Withanage said that local arrack and vinegar made from artificial toddy have been identified as one of the main causes of chronic kidney diseases.

He further said the government loses over Rs 180 billion a year due to the illicit liquor and tobacco (Rs. 100 billion on illicit liquor and tobacco and Rs. 80 billion on illicit toddy).

“We expected the government to present budget proposals to counter the loss of revenue, but there was none”, he added.

Excise Department spokesman, Deputy Commissioner, Kapila Kumarasinghe said there were instances where toddy manufacturers were caught for using illegal methods to increase the volume of alcohol. Water, sugar, urea, yeast and salt are being used to get a high content of ammonia in toddy.

He said that toddy is being sold in taverns as fresh toddy and bottled toddy after pasteurizing so that they could be kept for one to two weeks. Toddy is also being sold for the production of vinegar. If toddy with additives are used to distill arrack, the machines extract only the alcohol and the additives are discarded as ‘spent-wash’. The distilling machines are calibrated only to extract alcohol, and not other elements in the raw materials.

In the most popular brands of arrack sold in the market, there is only three percent toddy and 97 percent water, ethanol and rectified spirits. Adding alien items during production is illegal,” he warned, adding that the Excise Department with its available resources is fighting hard not only against the artificial toddy industry but also other narcotics and drugs, he said.

Excise Commissioner General Bodaragama acknowledged there was a significant loss of excise revenue due to various tactics used by toddy manufacturers.

He said that there is a leakage of tax revenue but assured that he was certain that it could not be Rs. 80 billion.

State Minister of Money & Capital Market and State Enterprise Reforms Ajith Nivard Cabraal told The Sunday Island that Pathirana had raised this issue several times in Parliament and he had already instructed Secretary to the Ministry of Finance and the Excise Department officers to submit a comprehensive report to him on the matter.

The toddy industry extends from Kalutara, Gampaha, Puttalam, Badulla, Moneragala, Hambantota, Anuradhapura to the Northern and Eastern provinces. As at Dec. 31, 2019, there were 3,094 licensed toddy tappers and 32 licensed toddy producers in the country.

“There could be many more engaged in supportive services for their livelihood but we have no exact details on them”, he noted.

“Pathirana made constructive suggestions and we took note of them. We are thankful to his efforts and are determined to remedy the situation. I intend to study this matter first with my officials. I assure you that this would be studied properly and necessary action initiated”, the Minister assured.

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GL: Colombo Port City Bill received AG’s sanction



…SC scheduled to commence hearing petitions today

By Shamindra Ferdinando

SLPP Chairman Prof. G.L. Peiris says that the proposed Colombo Port City Economic Commission Bill is consistent with the Constitution. Prof. Peiris, who is also the Education Minister, insists the Bill received the sanction of the Attorney General.

Prof. Peiris explained to the media the circumstances under which the incumbent government had initiated the proposed Bill. He did so having briefed Ven. Dr. Ittapane Dhammalankara Thera as regards the current political developments, at the Sri Dharmaloka Maha Viharaya, Rukmale, Pannipitiya, on Saturday (17).

President Gotabaya Rajapaksa recently presented the Colombo Port City EC Bill to the Cabinet of ministers. The 76-page Bill provides for the establishment of an EC authorised to grant registrations, licences, authorisations, and other approvals to carry on businesses and other activities in the Special Economic Zone (SEZ) to be established within the Colombo Port City.

Responding to government member Dr. Wijeyadasa Rajapakse’s bombshell accusations that the proposed Bill when enacted in parliament would transform newly reclaimed land adjacent to the Galle Face Green to sovereign Chinese territory, Prof. Peiris emphasized the responsibility on the part of the President in respect of the implementation of the project. Declaring that even an amendment couldn’t be moved without specific approval of the President, Prof. Peiris said all reports pertaining to financial matters, too, should be submitted to the President.

The former law professor also challenged those opposed to the proposed Bill claiming that the police and the military would be excluded from performing duties in the reclaimed land. One-time External Affairs Minister insisted that the police and the military enjoyed the right to exercise powers in terms of the country’s law in case of violations.

The minister said that the government was keen to create an environment conducive for foreign direct investment. However, those who now decried the Colombo Port City EC Bill conveniently forgot the formation of the ‘Greater Colombo Economic Commission’ (GCEC) under a new draconian Bill introduced by the then President J.R. Jayewardene.

Prof. Peiris said unlike JRJ’s Bill, the one proposed by the incumbent government adhered to the Constitution hence the approval from the Attorney General.

Prof. Peiris alleged that the JRJ’s Act paved the way for GCEC to take decisions pertaining to newly formed Export processing Zones (EPZ) and basically conduct its affairs outside the purview of the parliament. Claiming that those who exercised the required powers could transfer funds to and from accounts and anyone violating the secrecy faced jail terms, Prof. Peiris stressed that even the judiciary couldn’t intervene in some matters pertaining to this particular Act introduced in 1978.

According to Prof. Peiris, in 1992, the then President Ranasinghe Premadasa further strengthened the law by depriving the public an opportunity to obtain a restraining order from a court in respect of the all-powerful Commission.

Prof. Peiris accused the UNP and its breakaway faction, the Samagi Jana Balavegaya (SJB) and other interested parties of propagating lies against the project as part of their overall political strategy. The minister acknowledged that the UNP was among those who moved the Supreme Court against the proposed Bill.

Since former Justice Minister Rajapakse strongly condemned the proposed Bill at a hastily arranged media briefing at Abayaramaya under the auspices of Ven Muruththettuwe Ananda thera, several Ministers and State Ministers, Keheliya Ranbukwelle, Mahindananda Aluthgamage, Prof. G. L. Peiris, Namal Rajapaksa, Ajith Nivard Cabraal responded to their colleague on behalf of the government.

A five-member bench of the Supreme Court will begin hearing the petitions today (19).

Among those who filed cases against the proposed Bill were President of the Bar Association Saliya Pieris, PC, former lawmaker Wasantha Samarasinghe on behalf of the JVP, civil society activists, Gamini Viyangoda and K.W. Janaranjana on behalf of Purawesi  Balaya and the Center for Policy Alternatives (CPA).

Viyangoda questioned the government’s motive in depriving the public ample time and space to challenge the constitutionality of the Bill.

Purawesi Balaya spokesperson said that the disputed Bill had been placed on the Order Paper of Parliament on the 8th of April 2021, at a time when the sittings of the Supreme Court were suspended for the vacation. In terms of the Constitution any citizen seeking to challenge a Bill on the grounds that it is inconsistent with the Constitution has to do so within one week of being placed on the Order Paper of Parliament, which in this instance is the 15 th of April 2021. The petitioner said between the 8 th April 2021 and 15 th April 2021, there were the weekend and three public holidays intervening, thereby giving any citizen seeking to challenge the Bill, only two working days to obtain legal advice and representation.

Those who complained bitterly over urgent Bills exercised the same strategy as regards the controversial Bill, the civil society activist said. Responding to another query, Viyangoda said that if the government was confident the Bill didn’t violate the Constitution, it could have been properly discussed at their parliamentary group meeting before being presented to the cabinet of ministers.

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Hiding in obscure corner of India, Myanmar’s ousted lawmakers plotting to dethrone military junta




Our Special Correspondent


Roughly a dozen ousted Myanmar lawmakers, who fled to India after the February 1 military coup, are now busy plotting to dethrone the generals.

In a spartan hillside room in India furnished only with a thin sleeping mat, one of the Myanmar Members of Parliament (MPs) spends much of his days attentively listening to Zoom conference calls and tapping away messages on his smartphone.

The short, soft-spoken man is among the handful of ousted Myanmar MPs who have fled across the border to India’s remote north-eastern region after the military coup and the lethal crackdown on dissent.

Two of the lawmakers and a Myanmar politician spoke to a Reuters reporter. They are involved with the Committee Representing the Pyidaungsu Hluttaw or CRPH, a body of ousted lawmakers that is attempting to re-establish the civilian government and displace the military.

The three said the group is supporting demonstrations, helping distribute funds to supporters and holding negotiations with multiple entities to quickly form a civilian administration nationwide. They asked not to be named for fear of reprisals against their families back home.

Most of the ousted lawmakers are from deposed leader Aung San Suu Kyi’s National League for Democracy (NLD) that overwhelmingly won a November 2020 election, which the military has annulled.

The coup has been met with a fierce pro-democracy movement and tens of thousands of people have taken to the streets across the country, despite the crackdown.

Security forces have killed over 700 people, and more than 3,000 have been detained, including more than 150 lawmakers and members of the former government. Mobile and wireless internet services have been shut down.

The fear of detention and inability to rebuild a civilian government without internet connectivity has driven some Myanmar lawmakers involved in the resistance to work from India, the two MPs elected to Myanmar’s Parliament said.

“There is no time,” one of them, who is from the country’s western Chin state, told Reuters. “People are dying in our country.”

A spokesman for Myanmar’s military did not answer calls seeking comment. The junta has accused the CRPH of treason. The group is working to set up a national unity government to challenge the military’s authority.

Since fleeing to India around two weeks ago, the lawmaker said he had been holding regular discussions with colleagues to set up a parallel administration in Chin state, under directions from the CRPH.

The process is complex, involving building consensus between elected representatives, political parties, ethnic armed groups, civil society bodies and civil disobedience movement leaders, the two lawmakers and the politician said.

The CRPH is also keen on opening communications with India, where at least 1,800 people from Myanmar are already sheltering. It will seek New Delhi’s blessings for the parallel government it is attempting to form, the politician said.

“We can’t rely on China, Thailand and other neighbouring countries,” he said. “The only country where refugees are being welcomed is India”.

India’s External Affairs Ministry did not immediately respond to questions from Reuters.

This week, NLD lawmakers from Myanmar’s northern Sagaing region held an online conference call, but only 26 out of 49 representatives dialled in, according to the second MP who attended the meeting from India.

“We don’t know where the rest are,” the federal lawmaker said. Two party officials were now trying to track down their missing colleagues.

Some of the fiercest resistance to the junta has come from Sagaing. In the last two months, around 2,000 families involved in the civil disobedience movement in one part of the region have been given financial assistance of around 17 million Kyat ($12,143), the lawmaker from Sagaing said.

The presence and activities of escapee Myanmar lawmakers could pose a diplomatic quandary to India, particularly given New Delhi’s close ties with the Myanmar military rulers.

But India’s position on the Myanmar crisis itself appears to have somewhat shifted in recent weeks. This has also been acknowledged by some CRPH representatives.

At an United Nations Security Council (UNSC) meeting on April 10, Indian diplomat K. Nagaraj Naidu said New Delhi is pushing for a return to democracy in Myanmar. “The first, and most immediate step, in this regard is the release of detained leaders,” Naidu said.

However, India is concerned around internal divisions within the CRPH that could hobble its functioning, a source with knowledge of New Delhi’s thinking said.

The politician involved with the CRPH said he is hopeful that India will engage with the group.

“If democracy wins in Myanmar, it is also a win for India,” he said.

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Wijeyadasa, under heavy flak over opposition to China project, says ready to face consequences



by Shamindra Ferdinando

SLPP lawmaker Dr. Wijeyadasa Rajapakshe, PC, yesterday (18) told The Island that he stood by the accusations he made in respect of the proposed Colombo Port City Economic Commission Bill.

The former Justice Minister emphasised that he had expressed concerns publicly regarding the planned project after carefully examining the proposed Bill.

“In spite of a spate of statements issued by various government spokespersons, I’m confident of the legal process scheduled to begin today (19). The entire country should be concerned over the government move made at the behest of China.”

Responding to another query, the Colombo district MP urged political parties represented in Parliament to study the Bill with an open mind. The proposed law should be examined taking into consideration the previous UNP-led government transferring control of the strategic Hambantota port to China on a 99-year-lease and China is also in control of a terminal in the Colombo port for 35 years.

The MP said that he was ready to face the consequences of his decision to take a contrary view as regards the Chinese project. Those who had been benefited by the mega China funded project would shamelessly back it, lawmaker Dr. Rajapakse maintained, recollecting how members of parliament backed the 2002 Ceasefire Agreement brokered by Norway, shielded Treasury bond thieves et al.

Those who moved the Supreme Court against the proposed Bill included the Bar Association of Sri Lanka, MP Rajapakse said. The former Minister claimed that unprecedented tax exemptions provided to the businesses coming up in the newly reclaimed land adjacent to the Galle Face Green would pose a severe threat to the national economy.

The MP said that he didn’t personally have anything against China or any other country, but strongly believed in political and economic independence of the country. Therefore, the right-thinking lawmakers couldn’t under any circumstances vote for the proposed Bill as it was, the former Minister said.

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