Sri Lanka Plans Annual Tobacco Tax Hikes

Sri Lanka’s National Authority on Tobacco and Alcohol (NATA) wants to change taxes so that cigarette prices increase by 6 percent each year, reports The Island.

The proposed tax formula comprises six components––cigarette tax percentage, proposed price for next year, inflation, present price, GDP and the “externality factor” of 4 percent. 

“The 4 percent is added to ensure that the price of a cigarette is increased every year even if inflation drops to zero,” said Samadhi Rajapaksa, Chairman, NATA.

Rajapaksa noted that Sri Lankan depends less on tobacco tax revenue than many people believe. “Our tax revenue from these sources is about 11 percent only,” he said. 

Earlier, Rajapaksa said that the NATA would increase the minimum age for sale, purchase and promotion of tobacco products from 21 to 24 in 2022. 

Rajapaksa told the media that NATA had decided to amend the National Authority on Tobacco and Alcohol Act this year. 

The increase of the minimum age for sale, purchase and promotion of tobacco products was one of the proposed amendments to the Act, he said. 

“Already advertising, promotion and sponsorship of tobacco is prohibited. We want to stop the cross border advertising of tobacco products, too,” he said.