July 02, 2012 (LBO) – Legal hard liquor production has fallen 2.6 percent in the first five months of 2012, from a year earlier, but soft liquor (mainly beer) had risen 12.5 percent the finance ministry said in a report. Sri Lanka had seen a surge in beer sales partly due to stronger tourism arrivals as well as opening of the North and Eastern markets.
But due to an increase in excise duty on March 2012, tax revenues had risen 11.8 percent to 35,404 million rupees up to May from a year earlier.
There are no reliable estimates of tax unpaid liquor but the industry analysts have put estimates of anywhere around 30 to 50 percent of the legal market.
High taxes encourage illicit production.
In addition to cottage industry type ‘moonshine’ distillers, industry analysts say from time to time large scale organized illicit liquor outfits crop up.