Costs to Government Healthcare Services of Pesticide Poisoning Treatment in Sri Lanka

Series 4: A Proposal to Enhance Government Revenue by Reducing Consumption of Pure Alcohol.

An attempt has been made in this study to explore and introduce untapped revenue resources hidden within the excise tax regime which could be harvested if properly implemented. In this context, higher rate of consumption of pure alcohol provides justification for government intervention with special excise duties, and rationalization of harmful imports to reduce the social cost of providing policing and health services that is not otherwise covered by the price of the product. The social costs of alcohol also need to be considered in relation to the economic benefit such as saving of foreign exchange involved .On the other hand, the state coffers do not receive the total taxable income, for the reason that a substantial amount of liquor produced within the country does not fall under the tax bracket. The segment that does deprive the government revenue is known as the “illegal alcohol industry” sector, which sells liquor at the same price as the legal product and probably using the same channels, but does not pay taxes. Author focuses his attention to introduce taxation on alcohol by volume, which is directed at pure alcohol concentration. As it appears that high strength alcohol consumers’ demand is price inelastic, government is in a position to collect more revenue from liquor while indirectly modifying the drinking habit as alcohol excise taxes are used both to discourage consumption, relative to non-alcoholic drinks, and to modify drinking patterns, relative to alcohol products with lower percentage of alcohol by volume.

Research team

Kanchana Wickramasinghe
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Asha Gunawardena,
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Paul Steele
Dinusha Darmaratne

Funding

DANIDA