Low taxes for tobacco & alcohol amidst high food inflation? Sajith questions

COLOMBO (News 1st) - Opposition Leader Sajith Premadasa questioned the Government the reason for imposing low levies on tobacco and alcohol at a time when food inflation in the country is rapidly rising. 

Speaking at the Parliament, the Opposition Leader said that the country's food inflation rate is over 90%, however the inflation rate of tobacco and alcohol products is merely over 36%, and questioned as the why the Government is not taking steps to increase the price of such goods. 

He alleged that the ties between alcohol companies, politicians and treasury officials have resulted in the prices being maintained at a low without being subject to increases.

In response, State Minister of Finance Ranjith Siyambalapitiya stated that excise duty on tobacco products is levied on a unit basis depending on the length of the product, while excise duty is levied on alcohol products based on its strength. 

He further stated that in addition to these excise duties, a 15% value-added tax VAT on sales will be levied with effect from October 1st, along with a 2.5% social security contribution tax on turnover.

"In addition, these cigarettes and alcohol have been subject to a higher income tax rate of 40%. Investigations are being carried out on the work required to create a new tax system on cigarettes and alcohol as well," the Minister said. 

He added that the Finance Ministry is ready to achieve this goal of a new taxatoin system in the near future with a simple and clear index instead of a more complicated price formula.

The Opposition Leader requested for a proper timeline to be presented on the matter instead of repeating words of 'near future'. 

MP Rajitha Senaratne raised the issue of 40,000 deaths per annum in Sri Lanka due to smoking, and in the past, 90% tax used to be levied on tobacco. He alleged that the treasury opposes the move to levy higher taxes on tobacco products.