Sri Lanka raise booze, fag taxes; cuts fuel prices

Gasoline prices will go down by 2.00 rupees to 97.00 rupees while diesel will cost 2.50 rupees less at 62.00 rupees, the finance ministry said.

Prices of kerosene will remain at 48.00 rupees a litre.

The fuel price revision will also apply to across Indian oil retailer Lanka IOC’s 160 retail outlets, its Managing Director K Ramakrishnan said.

A net oil importer, Sri Lanka last lowered fuel prices on Sept. 27, as global crude prices climbed down from its record highs of 75 dollars to about 61 dollars a barrel.

President Mahinda Rajapakse, who is also the country’s finance minister, had ordered (fuel) prices to be reduced to ease the cost of living, D S Attygalle, Director General of the Treasury said.

Consumer prices in Sri Lanka rose to 15.4 percent in Sept from 15.3 percent in August, the Census & Statistics Dept said last week, due to price gains in electricity, fuel and vegetables.

In return, Rajapakse raised excise duties on tobacco and alcohol "to discourage consumption."

Accordingly, excise duties on alcohol go up by 25 rupees a litre, while a cigarette stick costs 50 cents more.

"Therefore, a 750 milliliter bottle of spirits will go up by 15 rupees, while a 72 millimeter cigarette stick will cost 50 cents more," Attygalle said.

The statement follows figures presented in parliament today that showed overall government spending will go up 42 percent to 804.6 billion rupees in 2007 from what was budgeted for this year.

In addition, defence spending is to climb by 45 percent to 139.5 billion rupees, with military procurements almost trebled next year.

(US$ 1 = LKR 104)

READER COMMENT(S)

6. callen Oct 17

The higher the prices goes on these two items the better the lives for the women and children and better health for all Fuel - better living for all

5. smart soul Oct 17

We are lacking the vision and all are busy making money to them selfs. No one is feeling for the country.

4. ROHAN Oct 09

When the government goes bankcrupt they always depends on someboday to save them.

to proove their inability to handle the ecconomy they increased the taxes for the mention products.

they use to give from left hand and collect it from right hand immediately.

i read some viewers comments and it seems they are realy misunderstood the gimmicks doing by the government.

if the government realy wats to stop illegal brewing ans so on they should intensifive the ongoing raids with more strength.

i can give you so many examples where they use to make kassippu openly without any fear.

if you need just start travelling from wattala to chilaw and you will find enough places with illegal brewery and etc.. so dont think it in light just use your brains and show the real facts with your conscience.
Expatriate from UAE

3. cj Oct 09

As a man of the masses Mahinda knows that there are more illicit manufacturers of Liquor and smugglers of fags than those who are genuine manufacturers.

So what he is really doing is helping the smugglers and the manufacturers of Kassippu to benefit by making the legal liquor and tobacco inaccessible to the masses...

The legal chaps might bring funds to the government but it is the illegal money which goes in to campaign contributions and he knows which side his bread is buttered on... but I salute him for the manner he manages to support his campaign contributors by telling us its all done for the good of the people... who cares what happens to the people who voted

2. Sena Oct 09

Unless a total ban is enforced, there will never be a booze and smoke-free Lanka.

And if you create a ban, then you will find much more illicit liquor smuggling and cigarette production.

I highly doubt any lankans will vote in a government who bans arrack, beer and cigs. The fact that the government's first choice to substitute fuel tax revenue by alcohol and tobacco tax revenue shows the inelasticity of demand for these 2 products.

And if people don't want to drink and smoke, then they really shouldn't enforce those values on those who DO like to drink and smoke. Freedom of choice.

Problem with this country is that a few try to decide whats best for everyone.

Sure, tax away, but a ban ? No.

1. Herath Oct 06

The soundness of fuel prices down is debated by many. But, the gradual increasing of the price of booze and cigarettes may create a country who's people are completely sober and drug free. This is a very good thing, even though the Govt's motives may not necessarily be to achieve this result.