Sri Lanka’s Public Finance Committee approves excise duty hike on liquor

The Committee on Public Finance has approved a proposal by Sri Lanka’s Ministry of Finance to increase the excise duty on liquor.

The decision was made during a meeting held on March 6, 2025, in Parliament of Sri Lanka, chaired by MP Dr. Harsha de Silva.

The Committee reviewed several gazettes, including Extraordinary Gazette No. 2418/42 (Excise Notification No. 01/2025), which pertains to the excise duty on liquor, and Extraordinary Gazette No. 2418/43, which includes an order under the Excise Special Provisions Act.

Officials informed the Committee that under the Excise Special Provisions Act, a 5.9% excise duty increase has been proposed on various items subject to a fixed rupee value-based tax, including motor vehicles, cigarettes, aerated beverages, and tobacco products. Similarly, a 5.9% increase in excise duty on liquor was proposed under the Excise Ordinance.

However, Committee Chair Dr. Harsha de Silva raised concerns about the tax hike on cigarettes, stating that it could not be approved without solid data. He highlighted that previous tax calculations had led to reduced government revenue while boosting profits for certain manufacturers.

He stressed the need for further clarification from the Ministry of Finance before making a final decision on the excise duty increase for cigarettes.

Despite these concerns, the proposal to increase the excise duty on liquor was approved. Some Members of Parliament expressed worries that higher taxes could push consumers towards illicit liquor. In response, officials stated that systematic raids against illicit liquor operations were ongoing.

They also noted that the country’s liquor production had risen by 22% in the past two months, with revenue growing by 23%. Additionally, plans are in place to introduce a new category of liquor to curb illicit consumption.

The meeting was attended by Deputy Ministers Dr. Harshana Suriyapperuma and Chathuranga Abeysinghe, along with MPs Ravi Karunanayake, Harshana Rajakaruna, Dr. Kaushalya Ariyaratne, Nimal Palihena, Wijesiri Basnayake, and Attorney-at-Law Lakmali Hemachandra.