The Committee on Public Finance (CoPF) questioned the officials of the Ministry of Finance as to why it took the Ministry 15 weeks to submit a Gazette published on the 16th of June 2023 to the Committee on Public Finance for approval.

The Committee Members mentioned that, as a result, the Committee faces criticism for delaying the approval of certain Gazettes. In reality, it is the Ministry that causes these delays by submitting the Gazettes late, leaving the Committee insufficient time for thorough analysis and consideration. The Committee emphatically instructed the officials to ensure that Gazettes intended for consideration are promptly sent to the Committee, without any unnecessary delays, and expressed great dissatisfaction with the current delays.

The aforesaid was stated at the Committee on Public Finance held recently in Parliament, Chaired by Dr. Harsha de Silva when the Committee met to consider and approve a Resolution under the Customs Ordinance, two Orders under the Excise Ordinance and three orders under the Excise (Special Provisions) Act, No. 13 of 1989.

The Committee reconsidered Resolutions under Customs Ordinance (Gazette Extraordinary No. 2336/72, 16th June 2023) at its meeting and noted that ‘soap noodles’ are imported for soap production, with a few companies importing palm oil fatty acids. Due to a new customs duty of 24% on palm fatty acids, certain companies are importing palmitic and lauric acids at lower tax rates in order to produce soap noodles. To maintain market price equality and prevent tax revenue loss, a new tax of 29% is proposed to be imposed on these substituted acids, now categorized under a new HS code. Evidently, the Committee noted its concern regarding the policy inconsistency related to this gazette, as the general policy for importation of raw materials is to implement lower taxes than finished or semi-finished products. However, the Gazette detailing the introduction of new HS codes for these derivatives was approved by the Committee on Public Finance upon further review.

While reviewing the Orders under the Excise Ordinance, the Committee engaged in a thorough discussion regarding the use of counterfeit stickers on liquor bottles and the massive loss of tax revenue to the country, given that 40% of alcohol in the market features counterfeit stickers. The Committee highlighted that since its revelation during the Committee on Ways and Means, numerous raids have been conducted, resulting in a sudden surge in revenue of 2 billion rupees within two weeks for the Excise Department. Consequently, the Committee has decided to further address this issue during a joint meeting with the Committee on Ways and Means and the Committee on Public Accounts. Furthermore, the Committee questioned officials as to why no court cases have been filed to date to pursue such illicit activities. In addition, Dr. Harsha raised concerns about the procurement contract for the digital sticker, as a price discrepancy was observed. A digital sticker costs only 0.20 cents, while the Government is paying the contractor 1.90 rupees per sticker, resulting in an overpayment. Officials stated that this was due to the contract being originally made for the previous physical sticker, and no amendments were made to the contract when stickers were digitalized.

State Minister – Dr. Suren Raghavan, Members of Parliament Chandima Weerakkodi, Nimal Lanza, Dr. Major Pradeep Undugoda, Premnath C. Dolawatte, Madhura Withanage, U.K Sumith Udukumbura, Rauff Hakeem, Patali Champika Ranawaka, Mahindananda Aluthgamage, Mayantha Dissanayake, Harshana Rajakaruna, were present at this Committee meeting held.