Excise Duty Increases Approved Across Multiple Sectors
Recent parliamentary committee approvals signal upcoming increases in excise duties impacting a range of goods and services, including motor vehicles, cigarettes, aerated beverages, tobacco products, and potentially fuel and alcohol. These changes, approved in Sri Lanka, follow proposals from the Ministry of Finance and are intended to adjust revenue streams, though concerns have been raised regarding affordability and investment impacts.
Sri Lanka Approves Excise Duty Hikes
The Committee on Public Finance in Sri Lanka has approved proposals to increase excise duties, as announced on March 10, 2025 Parliament of Sri Lanka. The decision followed deliberations on several gazette notifications, including those related to liquor (Gazette Extraordinary no. 2418/42), excise provisions (Gazette Extraordinary no. 2418/43), and insurance regulations (Gazette Extraordinary no. 2415/79).
Specific Duty Adjustments
Officials indicated a proposed increase of 5.9% for excise duties on items subject to a fixed rupee value-based excise duty. This includes motor vehicles, cigarettes, aerated beverages, and tobacco products Parliament of Sri Lanka. Committee Chair (Dr.) Harsha de Silva instructed officials to justify steps taken to increase excise duty on cigarettes and to simplify insurance claim processes Parliament of Sri Lanka.
Regional Context: Fuel and Other Levies
While the Sri Lankan committee focused on the aforementioned sectors, other regional finance committees are likewise considering duty adjustments. In Uganda, the Finance Committee urged Parliament to increase the excise duty levy on fuel from Shs1450 to Shs1550 per litre Business Focus. However, a government proposal to impose a Shs300 per liter levy on kerosene was rejected due to concerns about its impact on low-income earners Business Focus. The Ugandan committee also proposed reducing a proposed excise duty on mineral water to Shs50 per liter to encourage investment Business Focus.
Other Considerations
The Ugandan Finance Committee also recommended removing excise duty on incoming international calls from Tanzania and Burundi to align with existing lower rates for calls within the East African Community Business Focus.
Looking Ahead
These excise duty adjustments reflect ongoing efforts by governments to manage revenue and influence consumer behavior. Further monitoring will be needed to assess the full impact of these changes on both consumers and the industries affected. The implementation of these duties, particularly in Sri Lanka, will be closely watched for its effects on the economy and consumer spending.