It was revealed at the Finance Committee that vaping and electronic (e) cigarettes are illegal in Sri Lanka. The Excise Department stated that a program has been prepared to regulate e-cigarettes and that measures will be taken to arrest individuals found using them.
Meanwhile, it has been decided to increase the corporate income tax imposed on cigarettes from 40% to 45% starting April 1. This announcement was made by the Director General of the Department of Monetary Policy, Dr. Kapila Senanayake, during the Finance Committee meeting.
During the discussion, Dr. Harsha de Silva, Chairman of the Committee on Government Finance, raised concerns about cigarette taxation in Sri Lanka.
Dr. Harsha de Silva:
“It appears that cigarette taxes in Sri Lanka are gradually decreasing. Can you clarify the justification for increasing the excise duty on cigarettes?”
Dr. Kapila Senanayake:
“There are excise duties, VAT, SSCL, and several other types of taxes. The corporate income tax, which is currently 40%, will increase to 45% from April 1. In 2018, cigarette sales were recorded at 3.1 billion units. That figure has now decreased by approximately 2 billion.”
Dr. Harsha de Silva:
“What is the global benchmark for cigarette taxation?”
Dr. Kapila Senanayake:
“The global standard is 75%. However, in Sri Lanka, we currently operate at a level between 66% and 71%. The government and the cigarette companies do not jointly determine pricing. Instead, the companies set the prices after we impose taxes. That is why we have not yet reached the global benchmark.”
Dr. Harsha de Silva:
“We were at this level from 2015 to 2019, and again in 2021. Are vaping and electronic cigarettes regulated in Sri Lanka?”
Dr. Kapila Senanayake:
“They are illegal. We arrest people when we find out they are using them.”
