ECONOMYNEXT – Sri Lanka has hiked alcohol taxes by around 5.9 percent from January 11, which is higher than the rate of inflation as advocated by some interventionists, but lower than hikes in previous years, according to data in a gazette notice.
The excise tax on a (proof) litre of special arrack has been raised to 7,244 rupees in a gazette signed by President Anura Dissanayake from 6,840 rupees.
Excise on coconut arrack has been raised to 7,752 rupees from 7,320 rupees.
Excise on foreign spirit types made locally has been raised to 7,960 from 7,525 rupees.
Malt liqour (beer) with 5% alcohol has been raised to 5,735 rupees a litre from 5,415 rupees.
Malt liqour above 5 percent has been raised to 6,015 rupees a litre from 5,680 rupees.
Download alcohol 2418-42 Alcohol Gazette-Jan2025-EN.
Taxing legal alcohol has been controversial of late, after steep hikes reportedly expanded the illegal manufacture.
What used to be a cottage industry where 20 litre cans were discovered by authorities has turned into a big businesses where warehouses full of 4,000 litre plastic tanks are now being found, industry officials say.
A plastic bag (equal to a glass) of moonshine (kasippu) is now widely available for around 200 rupees with demographics that previously did not consume the brew also moving into it, accordingly tipplers.
Sri Lanka has been pushed to raise alcohol and cigarette taxes along with the inflation rate by some interventionists during an IMF backed bailout following the latest currency crisis.
The central bank however operated largely deflationary policy and has brought down inflation in 2024 despite winning the powers from political leadership to push up cost of living by 5 to 7 percent a year.
Sri Lanka has to raise more revenues from the public in in 2025 with salary hikes due for state workers and also more subsidies earmarked. (Colombo/Jan11/2025)
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