Sri Lanka relies on hard drinkers to raise tax revenue

K G P Sirikumara, Director, Legal and Compliance Department, Central Bank handing over the report to Prof. W D Lakshman

Oct 13, 2008 (LBO) – Sri Lanka’s government hopes to raise an additional two billion rupees a year in tax revenue through a recent increase in excise tax, a senior treasury official said. Raising revenue by taxing drinkers has long been a favourite tactic of successive governments in the island where per capita consumption of alcohol is high.

The tax on a litre of hard liquor has been increased by 50 rupees and on a litre of beer by 10 rupees, he told our sister news website

The revenue from the tax hike in the remaining months of this year is expected to be around 300 million rupees, he said.

The tax hike would raise the retail price of a bottle of hard liquor by about 35 rupees.

The treasury official said the increase in retail prices could result in a fall in sales of liquor.

Nevertheless, he said, he expects an estimated 45 million litres of hard liquor to be sold this year.

The government is strapped for cash owing to rising expenditure, especially on the war against the Tamil Tigers, and on a bloated bureaucracy.