By:Staff WriterColombo (LNW): Sri Lanka’s one of the major revenue collection authorities, the excise department is now under pressure of the Finance Ministry over the dorm in tax income owing to official inefficiency irregularities and corruption of the state entity in tax collection.
Finance Ministry secretary Mahinda Siriwardena has brought this matter and the urgency in meeting the revenue target to the notice of the excise commissioner general at a meeting with high officials recently.
Excise tax on alcohol and cigarettes has for long been a cornerstone of Government revenue, but the Treasury is now incurring colossal losses due to increase in tax evasion at a time income has become an urgent need.
Under this circumstance the treasury secretary has reprimanded the head of the excise department for the current poor performance requesting an explanation report on the failure to achieve annual revenue target.
The excise department is still to submit this report to the treasury as its urgent on the eve of the preparation of the 2024 budget, informed sources said.
The income of the department has come down drastically due to high taxes imposed on alcoholic beverages which resulted in price hike and drop in demands, officials of the department complained.
But the actual reason behind the loss of income due to the failure of excise officers to collect taxes allowing manufacturers and dealers to continue tax dogging via irregularities and corrupt practices, National Economic and Physical Planning, sectoral committee report highlighted.
The government has set ambitious revenue targets, including Rs. 3101 billion from the Inland Revenue Department, Rs. 1217 billion from Sri Lanka Customs, and Rs. 217 billion from the Excise Department.
Unfortunately, the current figures fall short of these expectations, with the Inland Revenue Department collecting Rs. 956 billion, Sri Lanka Customs contributing Rs. 578 billion and the Excise Department generating Rs. 109 billion, totalling only Rs. 1643 billion.
It is apparent that reaching the government’s revenue target is a challenging task. To address this, a committee has thoroughly examined the possibility of attaining the government’s revenue goal.
The committee has invited the Inland Revenue Department, Customs and Excise Department, which are the primary contributors to government revenue, to discuss strategies for proper tax collection.
Had these institutions implemented effective tax collection plans in 2022, they might have achieved the targeted income.
Excise department is losing tax revenue of Rs.60 billion annually as a result of irregularities, malpractices and inefficiency of the excise department, National Economic and Physical Planning, sectoral committee report revealed.
The department has collected Rs 109 billion during the first eight months of this year, the target of Rs 217 billion in 2023.
The annual production of liquor manufacturers is in the region of 540-600 million bottles per year but 40 percent of it is entering into the market evading taxes despite the introduction of security sticker system in 2018.