Oct 29, 2010 (LBO) – The Sri Lankan government is seeking to increase revenue for its cash-strapped Treasury by jacking up taxes on cigarettes and liquor, days ahead of the presentation of its annual budget, officials said. The tax on cigarettes has been raised by a rupee and that on a litre of 100 percent alcohol by 50 rupees from midnight Thursday.
The retail price of a bottle of arrack, a popular local brew, will rise by about 25 rupees, the finance ministry’s director general of fiscal policy S R Attygalle told our sister news website Vimasuma.com.
He said he expects the tax hike to yield additional tax revenue this year by 400-450 million rupees.
“This tax increase should usually yield an additional annual revenue of around five billion rupees,” he said.
The government is scheduled to present its budget for 2011 on November 22.
Taxes on liquor and cigarettes are a key source of revenue for the government, which also has to bear the burden of providing free health care at state hospitals to people who fall ill by smoking and drinking alcohol.
Excise Department statistics show that 410 million cigarettes and 141 litres of liquor and beer were sold in 2009