PUBLIC RECORD OFFICE
Reference :-
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لسل سالسا
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PUBLIC RECORD OFFICE, LONDON
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Excise duty per gallon," then the whole argument of the memorialists falls to the ground, and their proposition, which is a simple elementary truth as applied to Excise conditions in England, for example, does not apply to conditions as they exist in Ceylon.
in any true sense a payment of the nature of an
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The amount of rent paid per gallon 6 This is the real state of the case. by an arrack renter on each gallon sold by him is not the same thing as an Excise is a fixed amount determined An Excise duty per gallon duty per gallon ' beforehand by Government which every gallon of liquor sold for consumption has to pay before it passes into consumption. Every additional gallon sold has to pay the same amount as its predecessors, and the total revenue derived bears a definite The amount of rent paid per ratio to the total number of gallons consumed. gallon by an arrack renter in Ceylon is not a fixed amount determined beforehand by Government (or by anybody) which every gallon passing into consumption has to pay. Every additional gallon consumed in Ceylon lowers the amount of rent paid per gallon." and the total revenue derived does not bear a definite ratio to the total number of gallons consumed.
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7 The total amount of rent which an arrack renter pays to Government for the privilege of retail sale is really that share of the profits of the sale which the renter, under the influence of competition, or on an estimate of the lowest amount which he thinks Government is likely to accept. finds it necessary to pay to Govern
In making his calculations the renter undoubtedly ment in order to secure the rent.
It is one of the takes the probable total amount of consumption into consideration. main factors; but he has also to consider the price which he will have to pay to the distiller or wholesale dealer for his arrack, his own selling prices by the gallon and It is clear, therefore, by the glass, and the cost of distribution or working the rent.
" which he that the total amount of rent, i.e., of revenue to Government, does not bear a definite ratio to consumption, as it would do if the amount of rent per gallon finally pays were a true“ Excise duty per gallon." The total revenue is fixed before- amount of rent per hand in this case, and not the amount per gallon, and the gallon" which he has actually paid to Government cannot be determined until the last gallon has been sold. With an "Excise duty per gallon," on the contrary, it is the amount per gallon which is fixed beforehand, and the total revenue cannot be ascertained until the last gallon has been sold. This explanation can be further amount of elaborated, but I trust that sufficient has been said to show that the rent paid per gallon " is a totally different thing from an "Excise duty per gallon." I pass on now to consider the argument of the memorialists in paragraphs 8 and 9.
8. This argument is that, while in the two decades, 1891-1911, the population. development, and prosperity of the Kurunegala District increased at a higher rate (35 per cent.) than the adjacent district of Negombo (25 per cent.), yet the arrack revenue in the former district between 1899 and 1903 increased by only 20 per cent., as compared with an increase in Negombo of 49 per cent., and, therefore," the diminution of taverns in 1899 did materially retard the great increase which would have taken place in the consumption of liquor in the district, had it not been for that salutary check.”
9. It is not quite safe, with a renting system, to argue too closely from such comparisons, but, if spread over sufficiently long periods, general conclusions of a fairly correct character may be drawn. The memorialists compare the percentages of increase in development and prosperity spread over two decades, but they compare the percentages of increase in arrack revenue only between the years 1899 and 1903. As already pointed out in my fourth paragraph, this is not the proper way to make The comparison the comparison in order that correct conclusions may be arrived at. of revenue should at least be carried up to the last year to which the comparison of prosperity is carried, or to 1911. The following are the figures--The Negombo arrack rent increased from Rs. 208,800 in 1899 to 394,704 in 1911, or by 89 per cent, while the Kurunegala arrack rent increased in the same period from Rs. 140,000 to Rs. 330,333, or by 136 per cent. In other words, while Kurunegala outstripped Negombo in prosperity by 10, it surpassed it in increase of arrack revenue by 37 per cent., from which I think it is fairly safe to infer that the diminu- tion of taverns in 1899 did not "materially retard the great increase which would have taken place in the consumption of liquor in the district." The increase in consumption went on; the main effect of the abolition of the taverns being to convert a considerable proportion of the consumption that was previously licit into an illicit consumption. As further illustrating, if that is necessary, the "misuse of statis- tical data on the part of the memorialists, I may point out that the figures of
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percentage of increase of arrack revenue, viz., 28 per cent. in the case of Kurunegala and 49 per cent. in the case of Negombo, given in their paragraph 9, should really be 30 per cent, and 38 per cent, respectively.
10. With regard to the argument of paragraph 10 and the statements in paragraph 7 as to the attempt made, on Mr. Ellis's advice, to reduce consumption by increasing the price of the retail vend," I shall endeavour, in as simple terms as a somewhat involved and complicated question will permit, to explain the true position.
11. In the first place, the action taken by Government, on Mr. Ellis's advice, of making Rs. 4.48 per gallon a minimum instead of a maximum price was not, to reduce consump- as the memorialists assert-"a deliberate attempt
tion." It is practically impossible in Ceylon, by Government action, to secure any appreciable effect on consumption until complete control of production has been obtained, as it has been in the United Kingdom, and as it is hoped to be in Ceylon What Mr. Ellis endeavoured when the proposed reforms are gradually carried out.
to secure by raising the price of arrack sold by the gallon (ride page 7 of his report) was a means of checking illicit sale, and transferring this sale to a licensed tavern He states in his argument on this question of price (page 7): "In order to abolish the illicit seller, the tavern keeper must be given an area which he can both control and supply. He must be able to discover and check illicit manufacture or sale, and also satisfy the wants of those who have hitherto had recourse to the illicit seller. This would mean a large increase in the number of taverns.'
12. In the second place the distinction between sale by the glass and sale by the gallon must be kept constantly in view. Mr. Ellis has gone fully into this in his report (ride pages 4 and 5). The price of arrack sold by the glass averages about 50 per cent. above the price by the gallon. The profit on sale by the glass may be taken as going direct to the renter. The profit on the final disposal to the consumer of the arrack sold by the gallon may be regarded, speaking generally, as divided between the renter and the illicit seller.
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In all rents,there is a proportion of glass sales and the balance of gallon sales. The renter's profit per gallon on his glass sales is always much greater than his profit per gallon on his gallon sales. He would, therefore, prefer to sell all his arrack by the glass, if he could, but, as his taverns, speaking generally, are not adjusted to areas which they can both control and supply, he is forced to sell a certain proportion of his stock-in many cases the bulk of it-by the gallon. From the point of view of Government revenue Mr. Ellis illustrates this very pointedly (page 6) when he states that without in any way increasing the price paid by the consumer by the glass-and this seems a fair price to fix-the revenue might be benefited to the extent of certainly two millions, if arrangements were made by which the arrack now consumed could be obtained from a lawful instead of an unlawful source.'
We may now consider the figures of arrack revenue in the Kurunegala District quoted in the Governor's despatch, No: 466. It will be seen that the revenue, which had been rising steadily till it stood at Rs. 143,250 in 1898, fell in 1899 and 1900 (rent sold for two years) to Rs. 140,000. It was in 1899 that the reduction of the taverns from 96 to 49, or by 48'95 per cent., took effect, and when the renter was allowed to sell at any price above Rs. 4.48 per gallon.
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15. Dealing with the latter change first, a little reflection will show that the permission to sell at over Rs. 4.48 per gallon would affect practically only the gallon sales. It appears clearly from Mr. Ellis's remarks in that section of his report (page 4) dealing with his estimate of what the consumer is actually paying, and from the statement of prices in Appendix A. (page 23), that, though the conditions of sale laid down that no arrack was to be sold at a higher price than Rs. 4.48 per gallon, the actual consumer who bought his arrack by the glass, was really paying very much more, while the purchaser by the gallon, including the illicit seller, paid, as a rule, Rs. 4.80 per gallon, or a very small increase over the legal rate. price per gallon by the glass could not be increased suddenly by any appreciable extent, as that price is very much determined by the retail price of imported gin (ride Mr. Ellis's remarks, page 8), and to raise the price unduly would drive the consumer to imported liquor. The change from a maximum to a minimum, from the renter's point of view, merely allowed him to charge a little more per gallon. The arrack prices in the North Western Province in 1897 were, for sale by the gallon, Rs. 4.80 per gallon; and for sale by the glass, Rs. 7.40 per gallon, or over 50 per cent. more. They are now Rs. 5.50 per gallon and Rs. 8.07 per gallon respectively.
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