The issue with regard to the sticker to be made mandatory on all liquor bottles will be resolved in consultation with all manufactures soon, a top official of the Finance Ministry told the Business Observer on Friday.
“Discussions between the Finance Ministry and liquor manufactures are going on and the matter will be settled shortly,” Economic Advisor to the Ministry of Finance, Deshal de Mel said.
Liquor manufactures have been up in arms, threatening to shut down business over a directive issued by the Finance Ministry and the Department of Excise to all liquor manufactures to stick a ‘foolproof’ label on bottles and cans.
The Excise notification No. 04/2019 under the Extraordinary gazette No. 2128/30 issued on June 20 requires all liquor manufacturers to paste the sticker on the products from August 20.
“This is a good initiative by the Finance Ministry to prevent leakage of non duty paying alcohol from licensed manufacturers. There are around 20 licensees of which a large number do not pay excise duty. The move will help stop defrauding and boost revenue to the government,” Lion Brewery (Ceylon) PLC CEO Suresh Shah said.
However, according to liquor manufactures, the issue is with regard to compatibility of the technology.
“The decision to come up with a sticker is good but how compatible is the technology with our plants is the issue. We have raised the matter with the Finance Ministry and Excise Department officials on how we could make the system compatible with our operations and we are expecting a response soon,” Shah said.
Liquor manufactures said they do not know the exact cost of a sticker yet. However, rough estimates show that it would cost manufactures around one billion rupees to implement the system.
“We have asked the government to absorb the cost as the move will bring in a revenue of around Rs. 20 billion per annum to State coffers,” Shah said.
Officials from the Distillery Company of Sri Lanka PLC (DCSL), the largest hard liquor manufacturer in the country were not available for comment. DCSL and Lion Brewery PLC, the largest beer suppliers threatened to shut down operations if the government were to go ahead with the directive. The two companies had written to the Finance Ministry of their inability to comply with the directive within a short time.
“We will be able to settle the issue soon but will not be able to meet the deadline,” Shah said.
The grouse of liquor manufactures is not the move to curb illicit liquor flooding the market but the lack of clarity and the time given to comply with the directive.
Manufactures said they will not be able to keep pace with the speed of operations if they are to stick labels which would require machinery to print stickers.
According to the World Health Organisation the total health cost incurred by Sri Lanka due to alcohol related diseases per year is around Rs. 109,912.3 million and from cancer alone Rs. 9,738.8 million.