Opposition Parliamentarian and Ways and Means Parliamentary Committee chairperson Patali Champika Ranawaka claimed that the process commenced in November of last year (2023) to temporarily cancel the licences of liquor manufacturing companies that have defaulted on tax payments and to collect the relevant tax money, has now been abandoned.
Speaking to the media yesterday (27), he said that according to the relevant legal provisions, liquor is sold for cash, but that the relevant companies have however defaulted on tax payments amounting to around Rs. 7.9 billion over the past.
“This year too, there is a huge tax deficit. These calculations are based on reports submitted by the Excise Department, the Inland Revenue Department (IRD), and the Customs to the Parliamentary Committee on Ways and Means.”
In response to a statement recently made by the Excise Department Commissioner General (CG) M.J. Gunasiri, refuting claims of significant tax arrears to the Department, Ranawaka said that he would challenge the CG to first collect the taxes owed by liquor manufacturing companies.
“There are two companies that don’t pay these taxes. One of them has evaded tax payments in a very shameless manner. But, neither the Ministry of Finance nor the Excise Department has the guts to temporarily revoke their licences and collect these taxes. A programme was carried out in November, 2023, to revoke the licences of such companies and collect the taxes. That programme has now been abandoned.”
Ranawaka denounced Gunasiri's assertions, urging the Excise Department to focus on collecting its own tax arrears before downplaying the issue. He disclosed that the Excise Department itself has Rs. 7.6 billion in outstanding tax arrears that remain uncollected.
“Before making such statements, the Excise Department should first collect its tax arrears worth Rs. 7.6 billion,” he said. Ranawaka further alleged that two major liquor companies are persistently evading taxes, calling for immediate action from the Excise Department to address these arrears. He insisted that the Department must prioritise the collection of these unpaid taxes to increase Government revenue.
Speaking further, Ranawaka said that as of 31 December 2023, the uncollected tax in the country amounts to Rs. 1,120 billion, while tax waivers for 2023 total Rs. 978 billion. “Together, these sums reach Rs. 2,000 billion. If this amount had been available, it could have effectively doubled the State's income.” He also revealed that the Government's overall tax arrears amount to Rs. 1,120 billion, a figure that sharply contrasts with Gunasiri's claims.
State Minister of Finance Ranjith Siyambalapitiya was not available for comment.
Gunasiri dismissed claims of substantial tax arrears within the three primary sources of Government revenue — namely, the IRD, the Customs Department, and the Excise Department. Speaking at a press conference held at the Presidential Media Centre on Monday (26), Gunasiri asserted that the notion of significant tax arrears in these institutions is “illusory”. He clarified that the unpaid taxes in these three institutions amount to only Rs. 90 billion, which he explained is within the range of 3-5% of the total tax revenue in most countries. He emphasised that this percentage is consistent with global standards, thereby disputing the idea that Sri Lanka is facing a severe tax collection issue.
“The propaganda that there is a large amount of tax arrears is illusory. The amount of unpaid taxes in these institutions is only Rs. 90 billion, which is between 3-5% of the total tax revenue of any country,” Gunasiri stated. He also highlighted that the IRD, the Customs, and the Excise Department have collectively generated the highest income in recent history, exceeding Rs. 3 trillion. He further noted that for the first time in 25 years, the primary account had recorded a surplus, marking a significant achievement for the Government's financial management.