The number of cigarettes smoked in Sri Lanka increased by 6.4 percent between 2014 and 2016, according to a story in the Daily News quoting the executive director of Verite Research, Dr. Nishan De Mel.
Addressing a press conference held at the Government Information Department Auditorium in Colombo on Thursday, he said that 3,560 million cigarettes were smoked in the country during 2014, and that this figure had risen to 3,960 million in 2015 and to 3,790 million in 2016.
It was suggested that smoking should be reduced by 25 percent and that this decrease should be brought about at least in part by increasing taxation.
Meanwhile, the executive director of the Alcohol and Drug Information Center, Pubudu Sumanasekara, said that people did not switch to beedis after an increase in the price of cigarettes, as was stated in media reports.
This was because there were cheap cigarettes in the market.
It was very difficult to make the Finance Ministry and the financial section of the media understand the truth about the tobacco industry, he said.
Sri Lanka’s Department of Excise (DE) has denied claims that an attempt is being made to register a second cigarette company in the country, according to a story in The Island.
Ceylon Tobacco Company (CTC), the second largest market capitalized company quoted on the Colombo Stock Exchange, is Sri Lanka’s only legal cigarette manufacturer.
A spokesman for the DE, responding to claims by the Government Medical Officers’ Association (GMOA) about an attempt to register a second cigarette company, said that his department had not received any applications for registration. And there would have to be a formal application if such a company were to function legally, he said.
Meanwhile, Health Minister, Dr. Rajitha Senaratne, said the GMOA’s claims regarding an attempt to register another cigarette company in the country comprised an outright lie.
“There has been no other government in this country which has worked towards curbing the use of tobacco and cigarettes like the present one,” he said. “Bent on curbing the menace it has brought in several regulations inclusive of the 90 per cent tax on tobacco.”
Senaratne said that two cabinet papers had been submitted to prohibit the sale of cigarettes within a 500-meter radius of schools and the sale of individual cigarettes.
Annually the government received tax revenue of Rs100 billion while it spent more than Rs72 billion in treating diseases stemming from tobacco and cigarette consumption. About 25,000 people lost their lives annually due to tobacco and alcohol consumption.
Senaratne said that, according to the tobacco company [presumably, CTC], its income had reduced by one per cent after the government increased taxes on tobacco. “Would anyone be interested in setting up another cigarette company under such unfriendly circumstances?” the minister asked rhetorically.
During the term of the previous government, he said, the graphic warnings on cigarette packs had been reduced from 80 percent to 60 percent. However, at that time, the GMOA, which claimed to have dedicated itself to battle tobacco and smoking, was silent on the matter.
Senaratne pledged that the present government would not permit the registration of another cigarette company.
The GMOA, however, said it was in the process of writing to President Maithripala Sirisena urging him to probe the matter.
Ceylon Tobacco Company (CTC) has based its just-released annual report on the theme Beyond the Smoke to highlight its contribution to the national economy, according to a story in The Island.
CTC said in the report that it was the country’s only legal cigarette manufacturer and the second largest market capitalized company quoted on the Colombo Stock Exchange. It was the country’s largest individual tax payer, last year contributing Rs87.4 billion in excise taxes – seven percent of state revenues – to the national exchequer. And it supported 178,000 livelihoods through farming, manufacturing and retailing.
‘As an organization operating in a controversial industry, we understand the added responsibility placed on us to maintain the highest standards of corporate conduct and take pride in the sustainable and responsible way our operations are run,’ the report said.
“Given the health risks associated with our products, we understand that regulation is necessary although we urge the government to pursue balanced and evidenced based regulation which preserve the interests of adult consumers while ensuring the livelihoods of all those dependent on our industry, including over 20,000 persons involved in tobacco cultivation,” chairman Susantha Ratnayake was quoted as saying.
“Tobacco is a legal industry with an undeniable positive socio-economic impact and a major source of income to almost every government in the world.”
Despite all the challenges that had depressed CTC’s share price sharply during the year under review, Ratnayake said that the company had delivered yet another year of strong financial performance with earnings per share up by 18.1 percent to Rs67.05. Shareholders would be receiving a total return of Rs66.80 per share.
British American Tobacco Company with 83.14 percent of CTC is the dominant shareholder, but no Sri Lankans are among the Top 20 shareholders holding the balance.
Ceylon Tobacco Company (CTC) says that the revenue model that would have earned the government of Sri Lanka about Rs100 billion in 2016 is broken.
According to a story in the Colombo Gazette, the company said that excise and VAT hikes in October and November, which led to a 43 percent price increase in legally manufactured cigarettes, had severely impacted what the government earned through the sale of licit cigarettes in Sri Lanka.
Smokers, through the CTC, paid Rs73 billion in excise taxes during the first nine months of 2016.
And, based on projections, the government should have received more than Rs27 billion in tobacco excise taxes during the last three months of the year.
However, after the excise hike, the revenue was actually Rs14 billion during the final quarter, which took the revenue for the year to Rs87 billion, a shortfall of Rs13 billion.
“The government’s objectives of increasing taxes on CTC’s products were twofold,” said CTC MD and CEO, Michael Koest. “They hoped this measure would lead to a decrease in tobacco consumption in the country while at the same time increasing its revenue from legal cigarettes.
“However, what we have seen during the last quarter of the year contradicts both these objectives.
“We have seen a surge in illicit cigarettes entering the market and smokers substituting legal cigarettes with smuggled products or beedi.
“What’s also disturbing is that the government is losing out on the revenue opportunity.”
CTC said earlier that it was cutting jobs by 20 percent in its Colombo factory and shutting four leaf depots as a result of its sales dipping.
