Sri Lanka to review alcohol taxes; cut moonshine
Sep 06, 2017 06:58 AM GMT+0530 | 0 Comment(s)
ECONOMYNEXT - Sri Lanka will review alcohol taxes to link excise levies with alcohol content, which will reduce the illicit alcohol industry, a government policy document has said, ending interventionist taxes that has been linked to corruption.
Sri Lanka's alcohol taxes gave an advantage to 'strong' beer before 2015, with tax per alcohol content being more favourable to soft liquor, according to industry analysts, which led to a boom in beer sales.
Manual labourers who used to consume a 375 millilitre 'quarter' bottle of arrack also switched to the 500ml strong beer, they say.
After 2015, all legal alcohol taxes were driven up to almost unaffordable levels giving fresh incentives to the moonshine industry to flourish.
Taxes on beer were raised faster than hard alcohol, leading to a collapse in beer sales. A can tax was also slammed.
There were concerns that the policy was aimed at boosting 'quarter bottle' arrack sales giving bigger profits to a politically connected hard liquor maker.
Annual license fees of all alcohol producers were also pushed up to kill competition and give the firm greater market share, they say. Small producers went to court against the license fees.
"We will review alcohol taxation policies to link taxation with alcohol content, aligning with global best practices and reducing the consumptions of illicit alcohol," the policy document said.
Equal taxation based on alcohol content will mean that people themselves will choose what to do drink and state intervention in developing an alcohol preference in the population will end.
However overall high taxes on alcohol means that a state intervention exists in favour of 'kasippu' or moonshine sales.
It also means that living standards of manual labourers, who choose to consume products legally, will be lower than those breaking the law to drink moonshine. (Colombo/Sept06/2017)