CoPF green lights liquor tax hike, holds off on cigarette levy amid revenue concerns

Monday, 10 March 2025 05:39 - - {{hitsCtrl.values.hits}}

Dr. Harsha de Silva

Increases excise duty on liquor by 5.9% despite concerns about illicit alcohol
Cites 22% rise in legal liquor production and 23% revenue jump as justification
Plans new liquor category to curb illicit consumption

The Committee on Public Finance (CoPF) has approved a hike in excise duty on liquor but put the brakes on a proposed cigarette levy increase, citing concerns over its impact on Government revenue.

The move came during a heated session in Parliament, chaired by Dr. Harsha de Silva, where lawmakers debated the implications of the new tax measures on 6 March.

The 5.9% excise duty increase on liquor, issued under Excise Notification No. 01/2025 was given the green light despite warnings that higher prices could push consumers toward illicit alcohol.

Government officials defended the move, pointing to a 22% rise in legal liquor production over the past two months and a 23% jump in revenue.

They also revealed plans to introduce a new category of liquor to further curb illicit consumption.

However, the proposal to raise excise duty on cigarettes met resistance.

The CoPF Chair questioned the justification for the hike, arguing that previous tax increases had actually reduced State revenue, while boosting profits for major manufacturers.

Citing studies that suggest a flawed taxation model, Dr. de Silva insisted that the Finance Ministry provide a clearer date before moving forward.

As a result, the Committee postponed its decision, requesting a more detailed assessment before the next meeting.

The meeting was attended by Deputy Ministers Dr. Harshana Suriyapperuma and Chathuranga Abeysinghe, along with Members of Parliament Ravi Karunanayake, Harshana Rajakaruna, Dr. Kaushalya Ariyaratne, Nimal Palihena, Wijesiri Basnayake and Lakmali Hemachandra.

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