Harry J laments liquor tax policy

Don Harold Stassen Jayawardena

Despite the many social and economic evils of the illegal alcohol industry, the country’s taxation policy has encouraged its growth, while causing the legal, regulated and responsible sector to shrink, a top industry player has charged. According to business tycoon and Chairman/Managing Director of Distilleries Company of Sri Lanka (DIST) D. H. S. Jayawardena, the sharp rise in tax on alcoholic beverages is disproportionate to the increase in income level of daily wage earners, fishermen and plantation workers, thereby compelling them to shift their demand towards illicit liquor.
“This is a notable change that has taken place in consumer demand, entirely due to issues related to affordability. Therefore, I take this opportunity to place on record, as I have done previously, my concerns regarding the overall adverse impact on society, the economy at large and the Government revenue, due to excessive taxation on the legal alcohol industry,” Jayawardena said in his message to shareholders at the release of the group’s Annual Report 2012/13.

He, therefore, noted that in this context, I would like to raise a red flag on the emerging trend of legal entities understating their output, in order to pay lower taxes and thereby placing lower priced products on to the market.
Pointing out that the paint industry and cologne industry are increasingly becoming a façade for the importation of spirits in order to pass through customs, while also becoming a front for the illegal manufacture and sale of liquor, which naturally comes on the shelves cheaper than those that are heavily taxed, the outspoken Chairman said that therefore, it is vital the regulators enforce the law and contain the widespread corruption that fuels such illicit business activities, in order to ensure a fair playing field within the local market for law-abiding businesses.

“The toddy industry is collapsing alarmingly. Toddy suppliers are giving up their business by leasing or selling their lands and trees. The supply of toddy is decreasing every year. This unique and traditional Sri Lankan industry, which has been passed down over many generations, is becoming an endangered industry. The main contributory factor is the considerable rise in the number of illegal, artificial toddy manufacturers,” he said adding that most alarmingly the Excise Department is permitting these unscrupulous operators to distribute artificial toddy and pass it across to manufacturers instead of exercising and enforcing regulations to safeguard the Excise Ordinance.

During the current financial year, gross revenue of the DIST Group increased to Rs.65.8bn, while the company recorded Rs.51.5bn. Group Profit after Tax for the year was Rs5.3bn, while the Company’s normalized Profit was at Rs3.2bn (without the Intra-group capital gain of Rs.3.7bn included in the company’s results). With this capital gain included, the company’s Profit after Tax was 6.9bn.

http://www.nation.lk/edition/biz-news/item/20721-harry-j-laments-liquor-tax-policy.html

 

                       

Uncertainty reigns Pelwatte Sugar

The uncertainties surrounding the status of Pelwatte Sugar Industries, a subsidiary of Distilleries Company of Sri Lanka (DIST) continues to weigh upon the Company during the current financial year, DIST Chairman/MD, Harry Jayawardena has said. 

 “Following the expropriation of the factory by the State, the ownership of this property remains unresolved. The Company has not changed its advocated position of being the legal owner of the property since the occurrence of this unfortunate incident, and as such, we have communicated our views to the Treasury. However, as a precautionary measure, the Company has also lodged an official claim with the Compensation Tribunal appointed by the State. We hope that some clarity regarding this untoward situation would be forthcoming within the new financial year,” he noted.

Despite the many social and economic evils of the illegal alcohol industry, the country’s taxation policy has encouraged its growth, while causing the legal, regulated and responsible sector to shrink, a top industry player has charged. According to business tycoon and Chairman/Managing Director of Distilleries Company of Sri Lanka (DIST) D. H. S. Jayawardena, the sharp rise in tax on alcoholic beverages is disproportionate to the increase in income level of daily wage earners, fishermen and plantation workers, thereby compelling them to shift their demand towards illicit liquor.
“This is a notable change that has taken place in consumer demand, entirely due to issues related to affordability. Therefore, I take this opportunity to place on record, as I have done previously, my concerns regarding the overall adverse impact on society, the economy at large and the Government revenue, due to excessive taxation on the legal alcohol industry,” Jayawardena said in his message to shareholders at the release of the group’s Annual Report 2012/13.
He, therefore, noted that in this context, I would like to raise a red flag on the emerging trend of legal entities understating their output, in order to pay lower taxes and thereby placing lower priced products on to the market.
Pointing out that the paint industry and cologne industry are increasingly becoming a façade for the importation of spirits in order to pass through customs, while also becoming a front for the illegal manufacture and sale of liquor, which naturally comes on the shelves cheaper than those that are heavily taxed, the outspoken Chairman said that therefore, it is vital the regulators enforce the law and contain the widespread corruption that fuels such illicit business activities, in order to ensure a fair playing field within the local market for law-abiding businesses.
“The toddy industry is collapsing alarmingly. Toddy suppliers are giving up their business by leasing or selling their lands and trees. The supply of toddy is decreasing every year. This unique and traditional Sri Lankan industry, which has been passed down over many generations, is becoming an endangered industry. The main contributory factor is the considerable rise in the number of illegal, artificial toddy manufacturers,” he said adding that most alarmingly the Excise Department is permitting these unscrupulous operators to distribute artificial toddy and pass it across to manufacturers instead of exercising and enforcing regulations to safeguard the Excise Ordinance.
During the current financial year, gross revenue of the DIST Group increased to Rs.65.8bn, while the company recorded Rs.51.bn. Group Profit after Tax for the year was Rs5.3bn, while the Company’s normalized Profit was at Rs3.2bn (without the Intra-group capital gain of Rs.3.7bn included in the company’s results). With this capital gain included, the company’s Profit after Tax was 6.9bn.
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