Over 25 Bn revenue leakage since 2025 by cut on Cigarette Taxes

Sri Lanka has lost more than Rs. 25 billion in potential tax revenue since 2025 due to cigarette taxation falling below the World Health Organization’s (WHO) recommended benchmark, according to the newly launched Cigarette Tax Leakage Tracker by Colombo‑based think tank Verité Research. The dashboard, hosted on PublicFinance.LK, reveals that the country is losing revenue at staggering rates, Rs. 547 every second, Rs. 32,842 every minute, Rs. 47.3 million every day, amounting to Rs. 1.4 billion each month and Rs. 17.3 billion annually. In the first six months of 2026 alone, the shortfall exceeded Rs. 8 billion. The WHO recommends that cigarette taxes account for at least 75% of the retail price. Sri Lanka last came close to this target in 2018, reaching 74%. However, the tax share has since declined, dropping to 67% from 2025 onwards, widening the gap between actual collections and potential revenue. Verité Research notes that the government could plug this leak by gazetting increases to excise taxes across all cigarette categories. Proposed revisions include raising the tax on cigarettes up to 60 mm from Rs. 19.35 to Rs. 22.90, and on 60–67 mm cigarettes from Rs. 50.15 to Rs. 60.11, among other adjustments. If implemented, these measures would reduce the Ceylon Tobacco Company’s 2025 profits of Rs. 53.9 billion by Rs. 17.3 billion, while significantly boosting government revenue. The Cigarette Tax Leakage Tracker provides policymakers, researchers, and the public with real‑time visibility into these missed opportunities. The dashboard can be seen on PublicFinance.LK, Sri Lanka’s premier platform for public finance insights and analysis. https://dashboards.publicfinance.lk/cigarette-tax-leakage/ (Newswire)