Although the government has come in for a lot of flak from the general public over the VAT increase there is at least one segment of the populace who would say “cheers”. According to a news item in a vernacular newspaper yesterday the government has decided not to impose the increased VAT on liquor. Quoting an official at the Excise Department the report goes onto state that although the government had decided to raise the VAT on a range of items this will not apply to alcohol and cigarettes.
This no doubt would have raised the spirits of all the imbibers who have been periodically slapped with price increases on their bottle of arrack. Needless to say the decision is not wholly guided by a sense of altruism. A cash strapped government would certainly not want to kill the goose that lays the golden egg. Despite all pious pontifications by government worthies on the ills of alcohol and tobacco it is an open secret that the government derives its highest revenue from the excise levies. That is the reason why even the mathata titha programme of Mahinda Rajapaksa failed to make any headway. On the contrary during the last regime more and more liquor and bar licenses were issued to Rajapaksa cronies.
True, those who could afford it would not forgo their “shot “ no matter the price. But for the poor and the indigent even a marginal increase would be a huge drain on his family budget. It has been the past experience that any increase in legally manufactured liquor invariably drove the heavy drinker to the highly injurious rot gut or moonshine. This also caused domestic upheaval due to the diminished cash in hand for domestic expenses resulting in social problems as well. Therefore by increasing liquor prices the government will be dealt a double whammy by way of diminished revenue on the one hand and the strain on the health budget too to treat the deadly diseases occasioned by the consumption of kassippu.
The government is certainly in a dilemma. It badly needs revenue for its depleted coffers and cannot at the same time raise the excise levies on the pretext of making us an alcohol free country which will be a counterproductive move. President Sirisena is on record saying he is contemplating making the treasury operate without depending itself on excise taxes. However it is obvious that this is furthest from the reality. There were two increases in the VAT on alcohol following the last budget which makes it plain where the government is looking for its revenue.
It was reported recently that Sri Lanka was among the top ten countries in the world with the most number of boozers. This shows the extent to which ‘drinking’ has taken hold on our society. It also points to the futility of sermonizing on the evils of alcohol. It is common to see folk jostling with each other at taverns or the wine stores even at opening time. Weaning imbibers from the habit is next to impossible. What is best therefore is to provide them a safe and wholesome drink at an affordable price. This will at least keep those heavy drinkers with meagre incomes safe from a much worse fate if they are to veer towards the domestic brew, due to the cost factor, while deriving revenue to the state coffers.
There was a time during the Chandrika government when then Deputy Finance Minister Prof. G.L. Peiris proposed encouraging heavy drinkers to change to a softer brew like beer by reducing the price of the latter. It was argued that the sheer numbers that would convert to beer would more than offset any losses due to the price reduction. The government too should ponder such a course. It would certainly not tackle the problem of alcohol related disease but would at least stem the rot of driving people to the rot gut.
Peiris’s arithmetic
Former Minister Prof. G.L. Peiris says the government feared holding Local Government elections due to its many failures on the economic front and that should the LG polls be held today the Joint Opposition would romp home by a five sixth majority. Peiris speaking at a JO news conference did not elaborate on how he came by this calculation. The five sixth majority was achieved by the JRJ government under the first the past post system at the 1977 general election. There is yet no proper word as to under what system the LG poll would be held. A five sixth majority is arithmetically impossible under the PR system. Even Mahinda Rajapaksa fresh from the war victory could not muster the numbers for a two thirds majority and had to bribe UNPers to achieve this to pass his 18th Amendment. If it is indeed the first the past post system the JO will have to win all the local government bodies with a five sixth majority factoring in both the mainstream SLFP and the UNP, which defies comprehension.
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