The Research Intelligence Unit (RIU) criticized the Sri Lankan government for its failure to correct the loopholes that exist in the nation’s tobacco excise tax policy that has led to greater illicit trade and significant losses in tax revenue for the government.
“The high price differentials between legal and illicit cigarettes caused by taxation have contributed to significant market distortions and growth in smuggling. Cross-country experiences explored also established the connection of high taxes and illicit growth. It is imperative the government adopts a pragmatic tobacco policy to maximize revenue, achieve national health objectives and curb the growth of the illicit tobacco market,” said RIU research economist Lalinda Sugathadasa.
RIU estimates that the Sri Lankan government has lost over SLR14 billion ($77.1 million) due to illicit trade while the legal tobacco industry has lost as much SLR24 billion in revenue.