Excise Dept. in high spirits: Hard liquor production soars

Hard liquor production in Sri Lanka rose last year by 7.1 percent, with the Excise Department recording an increase of 28.2 percent in revenue collection on hard liquor, a new report shows.

By contrast, beer production dropped by 58 percent, causing a decrease of 37.7 percent in excise income from that sector, states the 2016 Performance Report of the Excise Department. This downturn was partly the result of a leading brewery suspending production for five months after being hit by floods last year, according to the report, which was presented in Parliament, recently.

The Distilleries Company of Sri Lanka ( Pvt) Ltd has contributed 60.7 percent of total hard liquor production and accounts for 57.2 percent of entire consumption when compared with manufacturing and consumption data of hard liquor manufacturers in the country. Moreover, it contributed 62.4 percent of total tax revenue generated from hard liquor. W M Mendis is the second largest producer at 10.5 percent.

Earlier this year, a request filed by the Sunday Times under t he Right to Information Act revealed that ethanol imports for the manufacture of hard liquor had also doubled from 10.4 million bulk litres in 2013 to 20.4 million bulk litres in 2015 after the n ew Government took over. The high levels were maintained in 2016 when 18.4 million bulk litres were legally imported.

Between 2015 and 2017, nearly 50 million bulk litres of ethanol were imported for the domestic liquor industry. By contrast, the quantity of ethanol legally imported in 2013 and 2014 was 23.9 million bulk litres.

The numbers point to a significant expansion in local production.

Overall, there was a 14 percent increase in excise revenue last year when compared with the previous year. Collection rose from Rs 105.9 billion to Rs 120.7 billion and this was also the highest revenue recorded by the Excise Department since 2012.

However, this still fell short of last year's targeted income of Rs 125 billion. The Excise Department said the target could not be met due to the impact of an instant hike in liquor prices attributed to the increase of excise duty twice by the end of 2015; a temporary halt in production at a leading brewery; and a drop in liquor production owing to a price hike caused by a 15 percent value added tax (VAT) on liquor at the end of 2016.

The increase in hard liquor production was quantified as 55.5 million proof litres, when compared to 51.7 million proof litres the previous year. The Excise Department said this was due to the introduction of excise duty on imported foreign liquor, the imposition of limits on liquor transportation and raids on places selling unlawfully manufactured liquor or kasippu.

The Excise Department occupied third place among income generating departments in 2016. It said it expanded the tax base and introduced new excise taxation strategies. Rs 981.3mn was raised through the introduction of taxes on imported foreign liquor as well as imported and country made spirits.

Excise officers conducted 32,782 raids related to excise crimes last year and the fines imposed by courts amounted to Rs. 150.3 million.

Meanwhile, one licence for the manufacturing of cigarettes and 521 licences for manufacturing beedi, cigars and pipe tobacco were renewed last year.