Excise Dept gears up to collect the highest revenue target of Rs.232 bn

Having the highest annual revenue target in 2024 of Rs.232 billion in history, the Department of Excise has to grapple in collecting a sum of Rs.60 billion more than the last year’s income of Rs.172 billion from the liquor industry hit by tax hikes, Excise Dept. chief M.J. Gunasiri, told the Business Times.

The department has been able to gain an income of Rs.165 billion in 2022 when the volume of production of absolute alcohol was in the region of 432 million litres, he said adding that it was reduced to 351 million litres in 2023.

The department has made this achievement in the background of the alcohol price increase and the decrease in demand for alcohol, the Commissioner General of the Excise Department revealed.

There was a significant drop in sales last year due to excise duty increase by 14 per cent on alcohol excise duty, 18 per cent VAT and 2.5 per cent hike in social security contribution levy, he disclosed.

Main factors that have contributed to the drastic drop in the liquor demand since the beginning of 2022 include higher price of raw materials required for alcohol production including ethanol, shortage of fuel, the lockdowns, the economic hardships faced by the people, inflation, the tax increase and alcohol price hikes.

Liquor manufactures have raised the prices of all liquor products from January 2024 The annual production of Sri Lankan liquor manufacturers is in the region of 540-600 million bottles per year, with over 5,000 liquor permit holders and 23 registered distilleries, according to the Excise Department.

The price hike in liquor has resulted in a 300 per cent increase in illicit liquor consumption in the island along with other dangerous drugs such as ice, cocaine and marijuana etc, he said.

Not paying the taxes genuinely to the state could also be defined as engaging in the illicit liquor manufacturing industry, he pointed out.

Clarifying the issue of revising the annual excise licence fees made with effect from January 12 and changing it again after 19 days due to objections from liquor distillers and associations, Mr Gunasiri noted that the final revision was made with effect from

February 1 clearing the issue.

He said that the revision on excise licence fees had an impact on profits of liquor manufactures already hit by a tax increase and loss of consumer demand for their products.

The Annual Excise Licence fees imposed earlier this year including on taverns and liquor retail outlets have been revised, effective February 1.

Accordingly, while the fee of Rs. 25 million imposed on new taverns remains unchanged, the Annual Tavern Licence fee has been reduced to Rs. 2 million from Rs. 2.5 million.

Meanwhile, the licence fee levied for the bottling of coconut toddy was reduced to Rs. 1.5 million from Rs.10 million while the bottling of palmyrah toddy was also reduced to Rs. 500,000.