Sri Lanka has misplaced over Rs. 25 billion in potential tax income since 2025 on account of cigarette taxation falling beneath the World Well being Group’s (WHO) really helpful benchmark, a examine reveals.Particulars have been revealed within the Cigarette Tax Leakage Tracker launched by Colombo‑based mostly assume tank Verité Analysis.
The dashboard, hosted on PublicFinance.LK, reveals that the nation is dropping income at staggering charges, Rs. 547 each second, Rs. 32,842 each minute, Rs. 47.3 million day by day, amounting to Rs. 1.4 billion every month and Rs. 17.3 billion yearly. In keeping with the information, the shortfall as at July 15, 2026 is at Rs. 9.2 billion.
The WHO recommends that taxes make up no less than 75% of the retail worth of cigarettes, a stage extensively handled as worldwide greatest observe. In 2018, Sri Lanka’s weighted-average tax-in-price stood at 74%, proper at that benchmark.
Nonetheless, the tax share has since declined. Since 2025, the weighted-average tax share had fallen to 67% regardless of taxes rising throughout a lot of the items after Sri Lanka’s financial disaster.
The analysis notes : “A lot of the tax on cigarettes is an excise set as a hard and fast rupee quantity per pack, which the federal government adjusts solely sporadically. The excise tax was raised sometimes, however by far lower than the corporate raised costs to extend its earnings. The tax went up in nominal phrases, and the information duly reported “tax hikes,” but the tax’s share of the worth stored falling.”
The analysis’s counter reveals how far more the federal government would accumulate in cigarette taxes if the tax share had been held on the WHO’s 75% benchmark: an estimated Rs. 17.3 billion in 2026, accumulating second by second.
Verité Analysis notes that the federal government may plug this leak by gazetting will increase to excise taxes throughout all cigarette classes.
Proposed revisions embrace elevating the tax on cigarettes as follows :
Courtesy : publicfinance.lk
If carried out, these measures would cut back the Ceylon Tobacco Firm’s 2025 earnings of Rs. 53.9 billion by Rs. 17.3 billion, whereas considerably boosting authorities income, the analysis additional notes.
Click on right here for the whole dashboard
