The impact of increcement of taxes on alcohol

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Alcoholic drink is a drink containig ethyl alcohol, normally known as intoxicant. Generally Alcoholic drinks are categorized into three different classs, such as vinos, beers and liquors. These are lawfully consumed in most states including Sri Lanka and every state has their ain policies and Torahs to regulate the ingestion, production and sale of alcoholic drinks.

Consumption of intoxicant has been identified as hazard factor for many wellness jobs and it can besides hold inauspicious consequence on societal and economical facets over the society. Due to the high degree of use of intoxicant many negative facet can elicit in a society such as, household societal wrangles and waste of national capital, vehicle accidents. It besides consequence the well being of the full society which would halter the work force of the state, all these factors would straight act upon the economical growing of a state. Further, Domestic force, societal unfairness including kid maltreatments and other riotous issues may tie in with the intoxicant and drug use and theses issues would make a important impact on the societal moralss and credences every bit good.

To collar the intoxicant related issues and to cut down the intoxicant ingestion authoritiess have been taken many attempts including increase of revenue enhancements on intoxicant. However, many authoritiess are frequently dependent on the immense revenue enhancement gross collected from the distilleries industry and even for the Sri Lanka this factor has been proven. Harmonizing to the beginnings, revenue enhancements on distilleries and baccy are a cardinal beginning of gross for the Sri Lankan Government even for today.

Methodology

Purpose

The purpose of my research is to analyze, analyse and place effectivity of increase of revenue enhancements on intoxicant to deter intoxicant ingestion in Sri Lanka and to happen out any other favorable and appropriate solutions to cut down the intoxicant ingestion in future.

STATEMENT OF THE PROBLEM

Heavy intoxicant ingestion has been identified as a societal threat and serious wellness issues in Sri Lanka today. Taxes on intoxicant have been increased to collar these issues and to cut down the intoxicant ingestion.

Justification

To extinguish the alcohol addiction in any degree of the society is turning against absolute world. This is chiefly due to the fact that devouring of intoxicant is integrated into societal imposts of many societies. Furthermore, in most of the civilizations, use of intoxicant is viewed as a most of import factor for sociableness. To make a society of 100 % non alky is impossible. However minimisation of intoxicant ingestion is possible and is so a must for any state to come on towards the success.

RESEARCH HYPOTHESIS

It is hypothesized that increasing of revenue enhancements on intoxicant would non cut down the ingestion and is merely increase the authorities income.

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Scope OF THE STUDY

The survey focused obtaining the perceptual experiences random forces that represent a sensible cross subdivision of the Western state and to obtaining of relevant informations from Department of Excise, Department of Census & A ; Statisticss, and from other relevant bureaus to organize a relationship between increase of intoxicant monetary values and ingestion of intoxicant. Percepts of indiscriminately selected person are analyzed to place the effectivity of increase of revenue enhancements on intoxicant to deter intoxicant ingestion.

Aim

The general and specific aims of this research paper are as follows.

General Objective. Is to place the impact of increase of revenue enhancements on intoxicant ingestion in Sri Lanka.

Specific Aims. To look into following countries:

Available policies with respect to intoxicant.

Types of intoxicant available in the market and to place fabrication companies, the ingestion, and the tendency.

Is there any increase of illicit intoxicant gross revenues due to higher revenue enhancement?

To happen out whether, will people be shifted to cheaper trade names if the monetary value of intoxicant goes up due to taxation.A

To happen out whether, increasing the monetary values of intoxicant to cut down intoxicant ingestion may really hold the opposite effects.

METHOD OF DATA COLLECTION

The needed informations for the research was drawn from the undermentioned beginnings ;

a. Primary beginnings For the intent of roll uping primary informations, two types of questionnaires were distributed among random samples in the western state. In order to obtain better apprehension on single perceptual experiences on the topic, questionnaire was included inquiry with replies. In add-on to above, Information were collected through authorities sections and by questioning resource forces in the said authorities sections.

B. Secondary beginnings. Relevant information was gathered from relevant books, diaries, the cyberspace, Annual Reports of the Department of Excise and Central Bank of Sri Lanka and from relevant web sites.

DATA ANALYSE TECHNIQUES

In this research paper, both quantitative and qualitative methods were used to analyze effectivity of increase of revenue enhancements on intoxicant to deter ingestion in Sri Lanka. A major part of the analysis consists of quantitative analysis due to the nature of the topic.

STRUCTURE OF THE PAPER

The paper is structured as follows:

Chapter One. The first chapter contains the debut to the paper.

Chapter Two. The 2nd chapter contains the Methodology of the survey.

Chapter Three. The 3rd chapter used to depict the types of intoxicant in the market and handiness of policies.

Chapter Four. The 4th chapter contain gathered informations.

Chapter Five. The 5th chapter includes analysis of gathered informations.

Chapter Six. The decision and recommendations.

Restriction

This research survey was completed with in two month of period. An about 240 questionnaires were distributed among random and cross subdivision forces in the Western Providence country. If clip permitted, a larger study would hold rendered a better representation of different perceptual experiences.

Chapter THREE

Background

TYPES OF ALCOHOL IN THE SRI LANKAN MARKET

At the present, handiness of intoxicant drink types in the Sri Lankan market comprise of chiefly Arrack, Beer, Toddy, and other types locally manufactured intoxicant merchandises. This chapter contains comprehensive and analytical information on types of intoxicant, production and the fabrication bureaus in the Sri Lankan context.

TYPES OF ALCOHOL BEVERAGES

Arrack.

Types of Arrack. The types of available arak in the local market can be classified as follows,

Molassess Arrack

Coconut and Processed Arrack

Particular Arrack

Arrack manufactured by utilizing imported intoxicant.

Arrack Manufacturing Industries. In Year 2009, there were 22 accredited Liquor Industries[ 1 ]. Among them, there were eight ( 08 ) Molassess Arrack Manufactures, Sixteen ( 16 ) Particular Arrack Manufacturing industries, Thirteen ( 13 ) Coconut & A ; Processed Arrack Manufactures, and Eight ( 08 ) Fabrication industries for Country Made Foreign Arrack. The accredited Liquor Manufacturing industries are listed in the Annex ‘C ‘ .

Production of Arrack.

The types of Arrack produced in Sri Lanka include Molasses arak, Coconut processed arak, Palmyra arak, and Special Arrack. This study merely focused on informations of production of the undermentioned types of Arrack: Particular, Molasses, Coconut processed and state made foreign spirits. Following table illustrates the existent production of arak for the last 08 old ages.

Above tabular array describes the production of types of arak changed over clip. Harmonizing to this tabular array, it is highlighted that, “ Particular Arrack ” is the highest produced arak and “ Molassess Arrack ” is the least produced arak for the last 08 old ages.

Beer.

Types of Beer. The Beer available at the local market are categorized in to two distinguishable types by sing the intoxicant content those are as follows,

Malt spirits ( Beer ) : Alcohol content below 5 % .

Malt spirits ( Beer ) : Alcohol content above 5 % .

Beer Manufacturing Industries and Production.

In Year 2009, there were 03 Beer Industries[ 2 ]viz. Mc-Callum Brewery, Asia Pacific Brewery and Lion Brewery. Manufactured Quantity of Beer harmonizing to the Manufacturing Industries depicted in following tabular arraies.

Hot toddy

Toddy Manufacturing Industries and production. In Year 2009, there were 21 Bottled Toddy Manufactures[ 3 ]and manufactured measure of toddy over the period from 2005 to 2009 depicted in following tabular array.

AVAILABLE POLICIES WITH REGARD TO ALCOHOL

The Parliament of Sri Lanka passed the Tobacco and Alcohol Authority Bill in June 2006 in order to obtain blessing for constitution of the National Authority on Tobacco and Alcohol. Subsequently the National Authority on Alcohol and Tobacco ( Act No. 27 of 2006 ) was came into consequence on the 01st of December, 2006.

The Act provides for the constitution of the National Authority on Tobacco and Alcohol for the intent of placing the policy on protecting public wellness, for the riddance of Tobacco and Alcohol related injury through the appraisal and monitoring of the production, selling and ingestion of baccy merchandises and intoxicant merchandises ; to do commissariats on detering individuals particularly kids from smoking or devouring intoxicant, by restricting their entree to tobacco merchandises and intoxicant merchandises, and affairs connected therewith or incidental thereto[ 4 ].

The cardinal commissariats of the Act.

Prohibition of the sale of any tobacco merchandise or intoxicant merchandise to individuals under 20 one old ages of age.[ 5 ]‘Article 31 ( 1 ) : A individual shall non sell, offer for sale, or license or advance the sale of any tobacco merchandise or intoxicant merchandise to any individual under twentya╦ć?one old ages of age ‘ . Prohibition on installing of peddling machines for distributing on baccy merchandises or intoxicant merchandises. Prohibition of sponsorships. Free distribution of baccy merchandises or intoxicant merchandise prohibited. Offenses associating to merchandise Markss of baccy merchandises and intoxicant merchandises.

Prohibition of baccy or intoxicant advertizements.[ 6 ]‘Article 35 ( 1 ) A individual shall non print or do to be published, or authorise the publication of a baccy advertizement or an alcohol advertizement ‘ .

Chapter FOUR

Datas

This chapter contains the relevant informations which were gathered to analyze the job and to run into the particular and general aims mentioned in the chapter two. Collected information further divided into two distinguishable classs, primary and secondary, due to the nature of information.

PRIMARY DATA

In carry oning the research with regard to the effectivity of increase of revenue enhancements on intoxicant to deter intoxicant ingestion, primary information was collected through a questionnaire distributed among 240 forces in the Western state. The questionnaire included 16 inquiries and besides there were replies to choose for easy assimilation. The English questionnaire and the Sinhala translated questionnaire are attached to annex “ A ” and “ B ” to the research paper.

The first portion of the questionnaire, there were seven inquiries given to acquire background cognition of the sample population by asking about their income degree, stuff position, whether they are devouring intoxicant and the ingestion form.

Alcohol Consumption in Relation to the Price.

Percept of Sample Population. In order to place the perceptual experience of sample population with respect to alcohol ingestion, if the monetary values are increased due to increment of revenue enhancements, following inquiry was asked

Answers given by the sample population to the statement, what do you believe on intoxicant ingestion, if the monetary values are increased due to increment of revenue enhancements are listed below

Enforcing of More Taxs on Alcohol.

Percept of Sample Population. To acknowledge the perceptual experience of general public with respect to ground for increasing of revenue enhancements, following inquiry was used.

Effectiveness of Increasing of Taxes on Alcohol.

Percept of Sample Population. To verify the perceptual experience of general populace, whether increasing of revenue enhancements has any impact on intoxicant ingestion, two different inquiries were used.

Inquired from sample population, whether they have come across that any individual/s who have stopped imbibing of intoxicant due to the higher monetary values. Answers provided by the sample population, to the statement, do you cognize any individual/s who have stopped imbibing of intoxicant due to the higher monetary values, are listed below

To happen out whether, will at that place be any decrease in intoxicant ingestion due to higher monetary values, following inquiry was asked

More than 44 % of the sample population believed that there is a general inclination among the people to halt the ingestion intoxicant when the monetary values are raised.

Figure 02: Percept fillet of intoxicant ingestion

Opposite Effectss on Increasing of Alcohol Prices.

To happen out whether, increasing the monetary values of intoxicant to cut down intoxicant ingestion may really hold the opposite effects, two different inquiries were used.

Inclination of drinker to switching to cheaper trade names.

To happen out whether, people will be shifted to cheaper trade names if the monetary value of intoxicant goes up due to taxation following inquiry was asked.

Answers stated by the sample population to the inquiry, do you switch to cheaper trade names if the monetary value of intoxicant goes up due to revenue enhancement, by the sample population are listed below

Inclination of drinker to switching to cheaper trade names and devour more.

To happen out whether, will the drinkers be shifted to cheaper trade names and imbibe more than antecedently, if the monetary value of intoxicant goes up, following inquiry was raised.

Answers to the statement, “ do you believe that raising revenue enhancements on intoxicant really blowback ” ( Drinkers may exchange to cheaper trade names and they might imbibe more than antecedently ) , by the sample population are listed below

Banning of Alcohol Usage Nationally.

Percept of Sample Population: In order to determine people ‘s perceptual experience with respect to forbiddance of intoxicant use nationally to cut down ingestion, following inquiry was raised.

SECONDARY DATA

In order to happen out effectivity of increase of revenue enhancements on intoxicant to deter intoxicant ingestion, and other general aims, secondary information was collected chiefly through the Administrative study of the Commissioner General of Excise and studies published by the Central Bank of Sri Lanka.

Further to understand the effectivity of increase of revenue enhancements on intoxicant to deter intoxicant ingestion, one-year ingestion of intoxicant over the last 08 old ages was collected and tabulated against the each intoxicant types.

Consumption of Alcohol.

Consumption of Arrack. The one-year ingestion of Arrack from 2002 to 2009 is tabulated in following tabular array.

Consumption of Beer. The one-year ingestion of Beer from 2002 to 2009 is as follows.

Consumption of Bottled Toddy. Annual ingestion of bottled Toddy from 2002 to 2009 is tabulated in following tabular array.

Government Taxes on Alcohol.

Alcohol is an economic trade good that is linked with governmental revenue enhancements. The Department of Excise, which comes under the horizon of the Ministry of Finance and is the legal authorization for the execution of the excise policies and relevant activities including aggregation of excise gross.

Excise Tax imposed on intoxicant per liter ( in Rupees ) for twelvemonth 2005 to 2009 are tabulated in following tabular array.

Government Revenue Through Alcohol Taxes

Datas on Government gross obtained through Taxes on Alcohol was gathered in order to ease on turn outing of research hypothesis. Relevant informations obtained from the studies published by the Central Bank of Sri Lanka.

The gross obtained by the authorities through intoxicant revenue enhancements for the last 08 old ages are shown in following tabular array. Furthermore, in order to determine importance of the intoxicant revenue enhancements as a chief income to the authorities, entire gross obtained through the revenue enhancements has been incorporated in the tabular array given below.

Illicit Alcohol Gross saless. Illicit intoxicant, more than decennaries has been abundant in Sri Lanka. Even though it is hard to verify, many claim that illicit intoxicant histories for most of the intoxicant consumed in Sri Lanka[ 7 ]. It is really hard to happen out the exact figures, since it was ne’er been recorded. However, in order to place the fabrication and sale of illicit intoxicant to some extent in the Sri Lankan context, sensing of improper distillment, ownership and gross revenues of illicit intoxicant in Western Province informations were collected.

Chapter FIVE

Analysis OF DATA

ALCOHOL CONSUMPTION PATTERN

Consumption of Arrack.

Table No 12, shows the one-year ingestion of arak for the last 08 old ages and how the ingestions varied over period of 2002 to 2009. Accord to findings, it is apparent that from 2004 to 2007 there has been a important addition in ingestion. From 2004 to 2005 as it has increased well by 14.27 % . In twelvemonth 2006, there has been a less addition of 4.60 % . However, in 2007 the ingestion has increased drastically by 19.02 % recoding maximal arrack ingestion.

Based on the undermentioned figure, it is clear that from 2007 to 2009 there has been a clear decrease in ingestion of arak and in 2008 it was recorded a important decrease in ingestion by 9.43 % and in twelvemonth 2009 it has been little diminution of 1.85 % .

Consumption of Beer.

Table No 13 shows the one-year ingestion of beer for the last 08 old ages and how the ingestions were varied over period from 2002 to 2009. Accord to the above findings, it is apparent that overall ingestion of beer in the 2004 and 2006 has been reduced. However in 2005 there has been a important addition in ingestion by 34.88 % . With compared to old twelvemonth ‘s ingestion.

Figure 05: Consumption of Beer

Harmonizing to the above figure, it is clear that from 2007 to 2008 there has been a little increase in ingestion and nevertheless, in twelvemonth 2009 it has been marked a little diminution of 1.8 % .

Consumption of Bottled Toddy.

Table No 14, shows the one-year ingestion of Toddy for the last 08 old ages. Accord to the findings, it is obvious that that from 2003 to 2005 there has been a important addition of toddy ingestion. In 2006 and 2007 it has decreased well by 16.95 % and 8.32 % severally. This may be due to revenue enhancements imposed on toddy and that is after 37 old ages.

Figure 06: Annual ingestion Toddy.

In twelvemonth 2008, there has been a little addition of ingestion by 3.40 % . However, in 2009, toddy ingestion has increased drastically by 39.38 % with compared to old twelvemonth ‘s ingestion, entering highest of all time toddy ingestion under the period of this reappraisal.

Annual Consumption Of All Types Of Alcohol Beverages.

The following tabular array illustrates the one-year ingestion of all types of intoxicant drinks and comparing of all types of intoxicant merchandises in footings of ingestion.

Harmonizing to the above findings, it is apparent that overall intoxicant drink ingestion has been started to worsen significantly, since twelvemonth 2007. In add-on, to understand the intoxicant ingestion in Furthermore, it is really much necessity to place the Per capita intoxicant ingestion.

Per Capita Consumption.

Per Capita Consumption is another signifier of a measuring which can be used to show alcohol ingestion among the full population. Further, this is a really logical method to stand for and analyse intoxicant ingestion, as it responsive to the both consumed measures and the population.

Per Capita Consumption = Total Alcohol Production + Imports – Exports

Entire Population

The undermentioned tabular array and figure illustrates per capita ingestion of all types of intoxicant drinks and comparing in footings of per capita ingestion.

Further, per capita ingestion form besides provides the eviedence to turn out that overall intoxicant drink ingestion has been started to worsen, since twelvemonth 2007.

In add-on to the above, perceptual experience of sample population on intoxicant ingestion if the monetary values are high, was sought and same is shown below. More than 52 % of the sample population believed that ingestion would cut down due to higher monetary values. This is besides confirms that the increasing of intoxicant monetary values is a really effectual method to deter or the cut down intoxicant ingestion among the citizens.

Figure 09: perceptual experience with respect intoxicant ingestion.

Therefore, increasing of the revenue enhancements on intoxicant merchandises proved to be a important factor to cut down the intoxicant ingestion among the people and this is a singular accomplishment in the attempts of cut downing alcohol ingestion among general populace

GOVERNMENT REVENUE THROUGH ALCOHOL TAXES

The gross obtained by the authorities through intoxicant revenue enhancements for the last 08 old ages have increased well as illustrated in undermentioned figure. About 5 % of Government ‘s revenue enhancement gross is made up by the revenue enhancements obtained through intoxicant.

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Percepts of sample population with respect to ground for increasing of revenue enhancements were found to be inline with the above findings. Therefore, from both factual grounds and the perceptual experiences of persons, it can be concluded that one of the chief grounds for the imposing of more revenue enhancement on intoxicant would be bring forthing of gross for the authorities.

OPPOSITE EFFECTS ON INCREASING OF ALCOHOL PRICES

Inclination of Drinker to Switching To Cheaper Brands. About 44 % sample population have indicated that they would be shifted cheaper trade names if the monetary value of intoxicant goes up. Harmonizing to table No 14 and figure No 06, toddy ingestion has increased drastically by 39.38 % with compared to old twelvemonth ‘s ingestion. Therefore, it can be concluded that there is inclination of switching to a cheaper trade name if the monetary values of intoxicant rises.

Inclination to switching to a cheaper trade names and imbibe more. About 80 % sample population believed that drinkers may exchange to cheaper trade names and they might imbibe more than antecedently. Therefore, it is apparent that there would be opposite effects integrated with increasing of intoxicant monetary values.

ILLICIT ALCOHOL

Following, figure shows the sensing of improper distillment, ownership and gross revenues of illicit intoxicant for the last 04 old ages in the Western Province. Accord to findings, it is apparent that that from 2007 to 2008 there has been a important addition in sensing of activities related to illicit intoxicant. However, in 2009 no of sensing has decreased drastically, entering the lowest no of activities related to illicit intoxicant under the period of this reappraisal. Therefore, it can be concluded that fabrication of illicit intoxicant has non been increased as a effect of higher intoxicant monetary values.

Chapter SIX

CONCLUSION AND RECOMMENDATIONS

The intent of this research paper was to analyze and look into effectivity of increasing of revenue enhancements on intoxicant to deter intoxicant ingestion in Sri Lanka and to research whether it generates any unfavorable or opposite effects among the society. Further to look into to what extent which the increasing of revenue enhancements on intoxicant contributes to bring forth gross to the Sri Lankan authorities.

A major part of the survey was quantitative due to the nature of the topic. An analysis was carried out on the consequences obtained through questionnaires and the secondary informations in order derive particular and general aims of this paper.

Harmonizing to the findings, factual and the perceptual experiences of persons, it can be concluded that, there would be opposite effects integrated with increasing of intoxicant monetary values such as inclination of drinker to switching to cheaper trade names.

One of the most cardinal rules of economic sciences is that, if a monetary value of a merchandise rises, the measure consumed of that merchandise falls. Hypothesis of this survey was that this rule may non use to the ingestion of habit-forming merchandises such as intoxicant. However, during this survey, it has proven that increasing of the revenue enhancements on intoxicant merchandise proved to be a important factor to cut down the intoxicant ingestion among people and it can be concluded that intoxicant ingestion do well react to alterations in monetary value. Thus the research hypothesis is disapproved.

Further, it is apparent that that authorities is in a place to roll up more gross from spirits while indirectly modifying the ingestion form. Therefore, it can be concluded that as intoxicant excise revenue enhancements are used both discourage ingestion and to obtain more gross.

Recommendation

Complete obliteration of alcohol addiction in any degree of the society is turning against absolute world. Despite assorted steps taken by national governments, it continues integrate into societal imposts of many societies and single degree of society. Following are a few recommendations that could be implemented to deter ingestion of intoxicant drinks in future.

National monitoring system is need to be map efficaciously and requires to be maintain an oculus on of intoxicant ingestion and its effects, and to raise consciousness amongst the public and policy-makers.

Increasing the monetary value of intoxicant farther by raising revenue enhancements on intoxicant.

By taking necessary action to prohibit of offering price reduction for alcoholic merchandises.

Reducing denseness or the figure of bars and liquor mercantile establishments.

Raising public consciousness through educational runs.