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Beer crisis: Presidential task force cites research to prove Finance Ministry wrong
The Presidential Drug Prevention Task Force has drawn the Finance Ministry’s attention to the task force’s three-years of research in a bid to persuade the ministry to review its alcohol taxation proposal.
“Both the President and those of us at the Task Force are deeply disappointed with the Finance Ministry’s conduct on this matter,” Dr Samantha Kumara Kithalawaarachchi, Director of the Presidential Task Force on Drug Prevention told the Sunday Times, claiming that they were completely in the dark regarding the decision to reduce taxes on beer.
He said the task force, which was formed in 2015 under the President’s vision of creating an “intoxicants-free country,” had conducted several studies to prove the strategy of reducing taxes on beer would not achieve any of its stated objectives.
The President has also urged the Finance Minister to consider a review of the proposal.
“The strategy has not worked in any other country and won’t work here. In fact, we can say with conviction that it would only make matters worse. We could have pointed this out to those at the Finance Ministry if they had only consulted us before formulating these proposals. For reasons unknown to us, this was not done.”
The task force claims that making beer cheaper and more freely available would be a “gateway” for people to explore hard liquor and illicit drugs.
Dr Kithalawaarachchi pointed out that the flawed strategy was tried out in 1995, when the then Government slashed beer taxes by as much as 50 per cent. Not only did this result in a documented rapid increase in alcohol use, it also led to more people turning to hard liquor and drugs, he claimed.
“We have interviewed many heroin addicts and they claim that their first experience of liquor and drugs were through beer and cigarettes. Their age suggests to us that many started on beer around the time it became more freely available. If we continue with this tax reduction, we will be repeating the same mistake.”
He also rejected claims made by Finance Minister Mangala Samaraweera that reducing beer taxes would persuade people to turn away from ‘Kasippu’ (Illicit Liquor).
The vast majority of kasippu drinkers would not automatically switch to beer just because it had been made cheaper, Dr Kithalawaarachchi said, describing the study widely quoted by the Finance Minister and others in the Government as ‘deeply flawed’. The study claims that 49 percent of alcohol users in the country consume illicit liquor.
He cited a research the task force conducted jointly with the Rajarata University to back his claim. The countrywide study was based on independently collected data from all 228 Divisional Secretariats and 438 police stations. It adopted two methods and sought to find out whether illicit liquor consumption in their areas was low, moderate or high. “Both methods showed there had been a drastic decrease in illicit liquor consumption from 2015 to 2017,” he said.
The reason for the reduction was due to increased raids conducted on illicit liquor dens and awareness campaigns at grassroots level, the Task Force maintained.
Those in the liquor industry, however, welcomed the Government’s move, noting that the Government had slapped a 75 per cent tax on beer in the 2015 Budget. In that year’s budget, the price of a can of beer, which stood at about Rs. 200, was raised to Rs.300, and then to Rs. 350, said a liquor industry source.
“The 2015 tax was most unfair. A fairer increase would have been to increase it gradually over 2015 and 2016 to about Rs. 270,” he said.He also countered that illicit drugs and liquor were available in the country due to deficiencies in policing, adding that it would be a stretch to claim that a price reduction on beer would increase drug addicts.
The Sunday Times, meanwhile, spoke to several liquor outlets in and around Colombo, and were told there was a significant increase in the sale of beer since the budget as opposed to hard liquor.
The price of beer has reduced by as much as Rs. 80 across the board, making it more affordable. By contrast, prices of hard liquor such as arrack have risen by as much as Rs. 160.
Many dealers, however, said it was still too early to draw conclusions on how much beer consumption had gone up and whether hard liquor consumption had dropped, particularly as December is a festive month.
“December is a time when people typically have more disposable income, which they can spend on liquor,” pointed out a proprietor of a large wine store. “As such, we would have to wait a few months to judge the impact over a period of time.”