Exorbitant taxes on alcoholic beverages, particularly beer, in combination with other restrictions on sales and marketing may inadvertently fuel the demand for illicit liquor, according a Chief Executive Officer, Lion Brewery (Ceylon) PLC.
“Due to the impact of taxation, legal alcohol is beyond the reach of the economically under privileged, the segment that still accounts for the largest numbers in the country. Further, those outside urban areas have little or no access to legal alcohol due to regulations that restrict distribution. Due to these two reasons, illicit alcohol is in wide spread use across the country.”
“Those reaching the age of majority – or adulthood – can vote to elect a government. They can also help conceive but must wait 3 more years to consume! However, none of these methods are of much use; they do constrain the legal Alcobev companies but have little impact in curbing demand for alcohol.” Shah said.
“The gap between demand & legal supply is comfortably filled by the deep rooted illicit alcohol business that is widespread across the country. Illicit alcohol producers & sellers are hardly constrained by the rules of the Excise Department nor do they respect the National Alcohol & Tobacco Act,” he added.
Noting that efforts towards more effective enforcement against illicit alcohol only addressed the supply side of the issue, Shah called for more pragmatic policies on the pricing and availability of alcohol.
“The driver of the supply is demand – in turn a result of higher prices & poor availability of legal alcohols – and enforcement cannot address this aspect of illicit alcohol consumption. If the blight of illicit alcohol is to be addressed in a sustainable manner, it is essential that demand for the product is eliminated. This can be achieved if practical & pragmatic policies that address the issues of pricing & availability of legal alcohols are implemented.” Shah said.
He further noted that the present pricing policy on legally marketed alcohol means that hard liquor is more affordable than the milder beers as a result of higher taxes, resulting in the greater popularity of hard liquor over mild alcohols.
“This is not ideal; logically the reverse is more appropriate. Policies that link taxation, availability & promotion to alcohol content will help achieve a more appropriate balance in alcohol consumption.” “Today Sri Lanka is in a unique position; the most dangerous form of alcohol – illicit – is the cheapest whilst the least harmful – beer – is the most expensive. Legal hard alcohols lie in between the two.
With price driving the consumption of hard alcohols – both licit & illicit - it is no surprise that the country has multiple alcohol related issues.” Shah said.