Implementation of sticker proposal on Liquor Delay costs Govt Rs 40B

Government coffers have been deprived of approximately Rs 40 billion, due to procedural delays of over a year, in implementing the proposed fool-proof sticker label on each legal bottle of liquor.

This was revealed when Prime Minister Ranil Wickremesinghe recently addressed a group of flood victims in Matara, where he
explained why the Treasury finds it difficult to immediately release funds for relief measures.

"We are aware that it takes time for funds to be released from the Treasury to the relevant authorities in the affected areas. Our plan was to generate an income by introducing a special label to be pasted on each legally manufactured liquor bottle. But the whole thing got delayed by one year due to procedural delays. The tender board has forwarded the matter to the appeal board and from there to the Attorney General's Department.

This delay, of one year alone, has resulted in the Government losing Rs 40 billion," he said.

The Cabinet approval was granted to a proposal made by then Finance Minister Ravi Karunanayake in November 2015 to introduce such label.

Since liquor is heavily taxed by the Government, illegally blended and packed liquor evade tax and enter the market. In such circumstances, many consumers resort to consuming more harmful liquor.

"Furthermore, since the liquor produced after paying taxes is expensive, the availability of a substitute, in the form of illegally produced liquor, adversely affects the Government's revenue. Therefore, in order to prevent counterfeit products being brought to the market, the proposal made by the Minister of Finance, to make it mandatory to affix a protective label (sticker) on every legally manufactured bottle of liquor, under the supervision of the Department of Excise, and also to make the importers aware that it is mandatory to affix protective labels on imported liquor, within the Customs itself, prior to issuance to the market, was approved by the Cabinet," the Government announced at the time.

This was later incorporated in the Budget 2017, which was presented in Parliament by Karunanayake in November 2016, a year later.

"I propose that every tax-paid bottle of liquor must be labelled with a foolproof sticker. This provides a visual identification for the excise officers in identifying the tax paid bottles of liquor. The manufacturer of this sticker will be selected in a transparent manner through international competitive bidding, applying government procurement procedures. The enforcement of this transparent measure will help stop unregulated liquor being made available to consumer."