While the public is under severe pressure due to rising tax rates on all other essential goods and services in the country, the government has granted a special tax break of Rs. 17.3 billion for cigarettes alone in 2026, says Dr. Nishan de Mel, Executive Director of Verité Research. Sri Lanka Latest News.
According to data analysis by Verité Research, although World Health Organization (WHO) recommendations require a tax rate of at least 75% of the retail price for a top-selling cigarette brand, the Sri Lankan government has not complied with those standards.
Instead, Dr. Nishan de Mel states that the tax rate on cigarettes in Sri Lanka has declined to 66.8% since 2018.
In particular, from 2021 to 2026, while the country’s VAT, social security tax, and other indirect taxes were significantly increased, the tax burden on cigarettes was reduced by 7.6% during the same period.
The report further highlights that the government has lost a substantial amount of potential tax revenue due to adopting a concessional tax policy for the tobacco industry, which contributes to harmful health effects. It also warns that the continued shifting of the tax burden onto the general public remains a serious concern.
