Attention (English)

An audit inquiry has brought to light a financial fraud within the Smart Youth Night exhibition series, a special government initiative. This exhibition, which includes concerts, was initially proposed by Harin Fernando, the Minister of Youth Affairs and Sports. Irregularities in its planning and execution were recently revealed by Deputy Minister of Youth Affairs, Eranga Gunasekara.

During a recent media briefing, Deputy Minister Gunasekara disclosed that, although expenses were incurred for two of the 14 planned concerts in the series, these events were never held. The concerts, which were scheduled for Hatton and Welisara, saw preliminary costs amounting to Rs. 295,292, but neither event took place as planned.

Breaking down the expenses, Gunasekara revealed that Rs. 234,592 was spent on preparations for the Hatton concert, while Rs. 60,700 was allocated for the Welisara concert. Despite these substantial amounts, no concerts materialized.

The audit, conducted on January 6 of this year, found that these questionable expenditures occurred during the previous government’s tenure, amid a challenging economic situation. The Deputy Minister pointed out that the Smart Youth Night series, proposed by the Youth Services Council, began in April, but Cabinet approval was not granted until July. The Youth Services Council was only informed about the project a week after Cabinet’s nod.

The project was marketed as a health initiative aimed at improving the physical and mental wellbeing of young people by 2030, with claims of reducing non-communicable diseases. However, the audit has cast doubt on the credibility of these claims, describing them as unreasonable.

In response to these findings, Deputy Minister Gunasekara assured that a formal investigation is underway, with legal action set to follow against those responsible for the financial fraud.

The briefing, which took place at the Diyagama International Sports Complex in Homagama, also highlighted future development plans for the complex. Minister of Youth Affairs and Sports, Sunil Kumara Gamage, and Deputy Minister of Sports, Sugath Thilakaratne, were present at the event.

The Alcohol and Drug Information Centre (ADIC) has highlighted a significant development in Sri Lanka’s battle against alcohol and tobacco consumption. According to ADIC, a 20% increase in excise taxes on alcohol last year resulted in a dramatic 8.3 million litre drop in alcohol consumption. At the same time, the move contributed an impressive Rs. 11.6 billion to government revenue.

ADIC Executive Director, Sampath de Seram, expressed support for this tax hike, stating that it was a crucial step towards reducing public health risks. He explained that such measures align with recommendations from the World Health Organization (WHO), aiming to curb unhealthy habits like excessive drinking and smoking.

“This latest step is beneficial in two ways,” de Seram commented, emphasizing that higher taxes not only reduce consumption but also boost state revenue substantially.

The impact was also evident in cigarette sales, which saw a sharp decline of 521.5 million units last year. Despite this reduction, tax revenue from cigarettes increased by Rs. 7.7 billion, underscoring the dual benefits of excise tax hikes in the country.

However, de Seram cautioned that such initiatives should be implemented scientifically, taking into account inflation and other economic factors to ensure long-term effectiveness.

The Sri Lanka Vehicle Importers’ Association has expressed concerns over a significant potential increase in vehicle import taxes, which already hover around 300%. The association warns that taxes could climb as high as 400%, 500%, or even 600% for certain vehicles, mainly due to multiple layers of taxation.

Association president Prasad Manage explained, “There is a special import tax based on the vehicle’s value. Additionally, there’s a luxury tax, and all three are added to the CIF value. On top of that, an 18% VAT is applied. This results in four types of taxes determining the final cost of a vehicle.”

Projected Tax Hikes on Popular Vehicles

The association highlighted how these increased taxes could affect vehicle prices:

• Suzuki Wagon R: Taxes may rise from Rs. 1.6 million to over Rs. 1.8 million.
• Toyota Vitz: Current taxes around Rs. 2 million could increase to approximately Rs. 2.4 million.
• Toyota Aqua, Corolla, and Axio: Previously taxed between Rs. 5.7 million and Rs. 6.6 million, the taxes could now surpass Rs. 6.6 million.

While vehicle import costs are expected to surge, the prices of vehicles already in the local market are anticipated to see only minimal increases.

Advice for Buyers Amid Tax Changes

Despite the rising import taxes, Mr. Manage urged the public not to panic. He advised potential buyers to wait for new vehicle shipments to arrive in Sri Lanka, as supply levels may stabilise the market.

Policy Shifts Behind the Tax Changes

Sri Lanka has maintained strict restrictions on vehicle imports since 2020 due to the economic crisis. However, with the implementation of the International Monetary Fund’s (IMF) Extended Fund Facility (EFF) and the recovery of foreign reserves, there has been renewed optimism about easing import restrictions.

In September 2024, the Cabinet approved a phased resumption of motor vehicle imports under 304 Harmonized System (HS) Codes, effective from February 2025. However, a recent gazette notification introduced new excise duty amendments, further increasing taxes on both fuel-powered and electric vehicles based on cylinder capacity and vehicle age.

Deputy Minister of Trade, Commerce, and Food Security, R.M. Jayawardena, stated that all mill owners and storekeepers purchasing paddy during the ‘Maha season’ must register with the government’s Paddy Marketing Board.

He explained that the registration will establish a data system to monitor rice quantities received and ensure rice stocks cannot be concealed.

Jayawardena highlighted that the government is implementing the paddy purchasing programme to maintain a steady rice supply without shortages.

He further noted that the government will announce a fixed price for both paddy and rice simultaneously as part of this initiative.