Taxes on cigarettes, liquor and casinos up

The government yesterday announced plans to further raise taxes on the so-called sin industries—alcohol, tobacco and gaming, as it unveiled a broadly welfare-oriented budged, targeting the forthcoming elections.

Finance Minister Mangala Samaraweera proposed to raise the excise duty on cigarettes effective from today (March 6) and introduce the Nation Building Tax (NBT) on manufacturing of cigarettes effective from June 1.

“Accordingly, excise duty on cigarettes, which are more than 60 million, will be increased by 12 percent, resulting in an increase of Rs.5 per stick on average,” Samaraweera said presenting the Budget 2019.

“Excise duty on cigarettes will now be based on indexation with a minimum annual duty increase capturing annual inflation and GDP growth. This will ensure revenue protection and control affordability,” he added.

He also proposed to increase the cess duty on the importation of Tendu leaves (beedi leaves) from Rs.2,500 to Rs.3,500 a kilogram. The proposal is expected to bring revenues worth Rs.2.0 billion.

There was a strong case for bringing beedi under the government tax net as it operates in cottage industries and thus deprives the government of some sizeable tax revenue.

Meanwhile, effective today, the minimum annual excise duty charged on hard liquor manufactured locally will increase by 8 percent barring the excise duty on Special Arrack, while the duty on malt liquor will increase by 12 percent.

The revision of excise duty on cigarettes, liquor and selected goods are expected to bring Rs.37 billion into the government coffers.

Further, the government proposed to double the annual license fee of casinos to Rs.400 million with additional turnover tax of 15 percent coming into effect from April 1.

A casino entrance fee of US $ 50 will also be charged effective June 1.

The government expects to collect a total of Rs.2.5 billion from casino related taxes and fees.