By Roy Denish
Sri Lanka has the world’s highest cigarette prices relative to purchasing power, according to 2024 World Health Organization (WHO) data cited in a recent Oxford Economics assessment examining tobacco taxation policies.
A recent assessment by Oxford Economics indicates that Sri Lanka has the world’s highest cigarette prices when measured using purchasing power parity (PPP).
Drawing on data from the World Health Organization (WHO), the report examines prevailing market conditions and raises questions about the effectiveness of applying a uniform tobacco taxation benchmark across countries with differing economic circumstances.
According to the WHO data cited in the report, the retail price of cigarettes in Sri Lanka, relative to local purchasing power, ranks among the highest internationally.
Government taxes currently account for more than 80% of the retail price of legally sold cigarettes in the country.
However, the report argues that a higher tax share of the retail price does not automatically translate into a corresponding reduction in smoking prevalence.
Referring to WHO technical guidance, Oxford Economics emphasises that cigarette affordability and the final retail price paid by consumers are important factors influencing purchasing decisions and smoking behaviour.
Consequently, the report cautions against applying standardised global tobacco taxation models without considering individual countries’ economic circumstances.
Instead, it advocates tobacco tax policies that account for national income levels, local purchasing power, consumer behaviour and the prevalence of illicit tobacco markets.
The findings contribute to the broader debate over how governments can design effective tobacco taxation policies while balancing public health objectives, revenue considerations and the risks associated with illicit cigarette trading.
