Cigarette production in Sri Lanka fell 32% from 2.8 billion sticks in 2022 to 1.9 billion in 2025 following successive increases in tobacco taxes, Deputy Minister of Economic Development Nishantha Jayaweera told Parliament today (Aug. 20), according to The Morning.
Excise duties on cigarettes have increased four times since 2023, including increases of 20% in January and July 2023, 14% in January 2024 and 5.9% in January 2025. The government also raised VAT from 15% to 18% in January 2024 and corporate income tax from 40% to 45% in April 2025. Current cigarette excise duties range from 26.59 to 109.95 Sri Lankan rupees ($0.08 to $0.33) per cigarette, based on cigarette length.
Jayaweera said the tax policy is intended to increase government revenue while reducing healthcare costs and other socioeconomic impacts associated with tobacco use. He said higher tobacco taxes have contributed to gradual increases in direct and indirect tax revenue while supporting public-health objectives.
