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COPF Evaluates Tax Measures on Tobacco and Liquor Amid Revenue Concerns

April 28, Colombo (LNW): The Committee of Public Finance (COPF) convened recently to scrutinize the efficacy of recent tax hikes on tobacco and liquor, aimed at curbing consumption and bolstering government revenue. However, concerns arose over dwindling revenue attributed to increased smuggling and alternative measures in response to the tax hikes, prompting a thorough examination.

Chaired by MP Harsha de Silva, the COPF highlighted the necessity of analyzing the inflation index to guide future tax adjustments and researching existing tax systems to mitigate revenue losses. Moreover, the Committee expressed dismay at the Excise Department’s failure to tackle issues like tax evasion and the use of counterfeit stickers by liquor license holders, despite directives from the Ministry of Finance.

The COPF underscored the urgency of implementing recommendations to safeguard government revenue, particularly emphasizing the importance of digitalization to enhance revenue collection efficiency and combat illegal activities. Despite concerns over cost, the Committee urged prompt action to solicit quotations for digital software to streamline operations within the Excise Department.

Additionally, COPF approved three Orders under the Excise (Special Provisions) Act, detailed in Gazette No. 2364/36, Gazette No. 2361/44, and Gazette No. 2364/35. Effective from January 1, 2024, these Orders amend business hours for liquor licensed establishments and revise excise duties on various tobacco and alcoholic products, following extensive discussions during the COPF meeting.

MPs including Patali Champika Ranawaka, U. K. Sumith Udukumbura, Mayantha Dissanayake, Chandima Weerakkody, Madhura Withanage, Dr. Nalaka Godahewa, and Isuru Dodangoda, along with officials from the Excise Department and the Department of Fiscal Policy, were present at the Committee meeting.

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