The company’s brewery at Biyagama was flooded due to heavy rains last May, and it decided to import beer in order to maintain its 80 per cent share in the local market.
For that, it received a reduction, from Rs. 500 to Rs. 129 per litre, of the customs levy.
Altogether, Lion Brewery had to pay only Rs. 246 per litre, denying the state an income of Rs. 371 per litre.
Rs. 7.4 billion loss to the state
This amounts to a quarterly loss of state income of Rs. 7.4 billion, at the rate of an assumed importing of 20 million litres during the period, without counting its supply of 35 million litres.
However, there has been no record of how much of beer the company would import under the four month concession period and how much of beer it would keep in storage.
This means the state’s loss could be much her.
Meanwhile, the customs levy for beer importation has been raised to Rs. 800 per litre from 2017 budget.
Crony of PM, Malik, Daya
The prime minister and ministers Malik Samarawickrama and Daya Gamage are reportedly behind the concession granted to Lion Brewery.
Its owner Harry Selvanayagam is an adviser level close friend of the PM, while Gamage has a close relative working as a top official of the company.
Samarawickrama is someone who unofficially works for the benefit of his close friends.
However, subject minister Ravi Karunanayake has strongly opposed to the tax relief given to the beer company, purely because of the animosity he is having with Selvanayagams.
Last August, Karunanayake imposed an additional excise duty – Rs. 200 for hard liquor and Rs. 50 for beer.
Attempts by Selvanayagams to get it removed were futile, but now they have been able to get a further reduction of the tax money by Rs. 50 per litre.
Now, Lion Brewery pays only Rs. 246 per litre of beer as tax.
While the finance minister is trying to get state income raised as much as possible by way of burdening the masses with various taxes, other politicians are giving tax concessions to their cronies.
Beer is not an essential commodity and granting tax concessions mean just one businessman becomes wealthier, as other beer importers do not enjoy this concession.
These tax concessions have further come into question as Lion Brewery has obtained insurance compensation in lieu of its flooded factory, which amounts to several times of its profits from beer sales for the quarter.