The Committee of Public Finance recently greenlit three Orders under the Excise (Special Provisions) Act, focusing on business hours for liquor establishments and excise duties on tobacco and alcohol products, effective January 1, 2024. Chaired by Hon. (Dr.) Harsha de Silva, the committee delved into the impact of recent tax hikes on tobacco and liquor, aiming to deter consumption and bolster government revenue.

However, discussions revealed a concerning trend: a drop in government revenue over the past two months compared to the same period last year. The Committee attributed this decline to increased smuggling and the adoption of alternative measures due to the higher taxes. Concerns were raised about the Excise Department's lax approach to issues such as tax evasion and the use of counterfeit stickers by liquor license holders, despite directives from the Ministry of Finance.

The Committee highlighted inefficiencies within the Excise Department, particularly its manual operations hindering revenue collection and enforcement against illicit activities. Emphasizing the urgency of digitalization to address these challenges, the Committee urged immediate action to solicit quotations for digital software and prevent corruption within the Excise Department.

Amidst these discussions, questions surfaced regarding the Ministry of Finance's decision-making process on taxing essential goods, given the inefficiencies in revenue collection from liquor license holders. The Committee stressed the need for a thorough analysis of the inflation index to guide tax adjustments and prevent revenue loss, signaling a call for a revamped strategy to safeguard government revenue amidst changing consumption patterns and market dynamics.