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Cracking Down on Fake Liquor Stickers Boosts Sri Lanka’s Tax Revenue by One Billion

By Madhuri Ranasinghe

In a significant revelation, the Sectoral Oversight Committee on National Economic and Physical Plans exposed the impressive outcome of tackling the pervasive issue of fake stickers on liquor bottles. This initiative, spearheaded by the Excise Department, not only uncovered a sophisticated scam but also led to a remarkable monthly tax revenue boost of Rs. 1 billion. The disclosure, made on December 2, 2023, during a parliamentary committee meeting, sheds light on the collaborative efforts to combat economic fraud. Link: https://www.dailymirror.lk/top-story/Excise-Departments-monthly-income-up-by-Rs-1-bn-committee-reveals/155-272464

Unmasking the Fake Sticker Scam (Link: https://www.dailymirror.lk/print/front-page/To-mitigate-counterfeit-stickers-on-liquor-bottles-New-digital-security-sticker-should-be-introduced-MP-Patali-Champika/238-267753 )

The journey to this financial upturn began in September when the Ways and Means committee, chaired by Hon. Patali Champika Ranawaka, delved into the matter. During their investigation, officials from the Excise Department revealed a staggering 44,000 bottles with counterfeit stickers, discovered while inspecting 52 alcohol manufacturing sites. The fines imposed per company for such violations amounted to nearly 40 million, emphasizing the severity of the issue.

The consequences of using fake stickers on liquor bottles were not just limited to the fines. It was disclosed that the country lost a significant sum—Rs. 2,900 per liquor bottle—in tax revenue. Recognizing the gravity of the situation, the Committee on Ways and Means, after meticulous consideration, recommended strategic measures.  Link: https://www.parliament.lk/en/committee-news/view/3490?category=33

The committee suggested revoking the licenses of liquor manufacturing companies involved in the trafficking of fake stickers. Furthermore, the committee proposed reporting these incidents to the Criminal Investigation Department. The focus extended to liquor stores selling bottles with counterfeit stickers, with a call to cancel their licenses. A cutting-edge mobile application based on QR technology was proposed to swiftly verify the authenticity of liquor bottles.

In response to the crisis, the Committee recommended introducing an IT application for the Excise Department by year-end. This application would facilitate automatic tax calculations, online license renewals, and prompt license cancellations in case of tax default. Additionally, it suggested interoperability with other institutions and utilizing the National Identity Card number for identity verification.

Future-proofing Against Counterfeiting

As the Ways and Means Committee explored avenues to fortify the system against future counterfeiting, recommendations included the introduction of a digital security sticker featuring a QR code. This innovation suggested and spearheaded by the Ways and Means Committee aims to alleviate concerns about tax revenue accuracy and assures consumers of the authenticity of alcoholic beverages.

In a proactive move, the Committee urged the Excise Department to monitor all 38 liquor factories, implement a homogeneity identification method for liquor bottles, and establish a system allowing the Commissioner General of Excise to supervise all 23 liquor factories remotely.

As Sri Lanka examines the loopholes in taxation and economic integrity, these decisive measures mark a turning point in combating fraudulent practices. The collaboration between parliamentary committees and government entities showcases a commitment to upholding financial transparency and protecting the interests of both the state and its citizens. Looking ahead, we can expect things to become even more secure and modern, helping our country stay safe from fake activities that can hinder our financial stability.