Sri Lanka to introduce low-priced alcohol to curb illicit liquor consumption

The Excise Department of Sri Lanka has announced plans to introduce a new, affordable alcoholic beverage to reduce the increasing consumption of illicit liquor.

The decision comes as authorities seek to recover significant tax revenue lost due to the rise in illegal alcohol consumption.

Commissioner General of Excise, Udaya Kumara, revealed this plan during a recent meeting of the Committee on Public Finance (COPF). He stated that the increase in alcohol prices had driven many people to turn to illicit liquor, leading to a substantial decline in government tax revenue.

Kumara noted that this trend had been prevalent for some time but emphasized that regulation and proper oversight could bring consumers back to legal alcohol, ultimately boosting state income.

“In the past two months, we have carried out targeted raids and enforcement actions, which have contributed to increased revenue. It was not the tax hike that led to this rise, but rather the transition from illegal to legal alcohol sales. With continued regulation, we anticipate further revenue growth,” he explained.

He further stated that the introduction of a low-cost alcoholic beverage could generate additional income of approximately Rs. 50 billion.

“By offering an alternative at a lower price, we estimate that this initiative could bring in Rs. 50 billion in revenue. I will discuss this proposal with my team and submit it to the Ministry of Finance for approval,” Kumara added.

Excise Officer Jayantha Bandara, who also spoke at the event, pointed out that the consumption of hard liquor has been declining annually since 2022. He explained that the new alcohol product aims to mitigate the risks associated with illicit liquor, which often contains harmful substances.

As part of the initial phase, authorities plan to introduce a 180-milliliter bottle of alcohol, which is expected to generate tax revenue ranging from Rs. 50 billion to Rs. 100 billion, according to Bandara.

The Excise Department believes that this measure will not only reduce the health risks posed by illegal alcohol but also strengthen government revenue collection through controlled and legal sales.

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