Government negligence costs billions in cigarette revenue

The government lost billions of rupees in revenue because it did not implement an indexation formula for prices and taxes on cigarettes.

According to Verite Research, the foregone revenue from 2020-2022 is LKR 85 billion.

It will cost the government a further LKR 45 billion in 2023.

‘In 2019 the government introduced a policy where taxes and prices on cigarettes would be based on an indexation formula. Forgetting to implement the policy is costly’, said the Colombo-based think tank.

Sri Lanka is presently facing the most severe economic crisis in its history and the main problem is that Sri Lanka’s debt has become unsustainable.

‘One of the critical adjustments required for economic recovery is to substantially increase government revenue. However, there has been forgetfulness in terms of another pricing formula that has been presented in previous budgets. That is the formula on the pricing and taxation of cigarettes’, it added.