Harsha calls for urgent review of cigarette tax policy

MP Dr. Harsha de Silva has raised concerns over the government’s flawed approach to taxing cigarettes, emphasizing that the tax rate has been decreasing over the years, leading to lower government revenue.

Speaking in Parliament today (March 20), he highlighted the need for a comprehensive re-evaluation of the tax policy to ensure fair taxation and maximize state earnings.

Dr. de Silva, who also serves as the Chairman of the Committee on Public Finance (COPF), pointed out that international organizations such as the World Health Organization (WHO) and the United Nations Development Programme (UNDP) recommend a 75% tax on cigarettes.

However, he noted that, for some reason, this tax rate has been gradually decreasing.

“This tax has been gradually decreasing over the years. For some reason, the revenue going to the government is lower, but we know why. I’m not making an accusation, but since this hasn’t been properly analyzed, the profit earned by the companies is significantly higher than the revenue received by the government,” he stated.

He also criticized the government’s justification for recent tax adjustments. According to him, the government claimed to have added an extra 4% to the cigarette tax due to inflation, citing an inflation rate of 1.9%. However, data shows that last year’s inflation was actually 1.2%, meaning the tax should have been adjusted to 5.2% instead of 5.9%.

Given these discrepancies, Dr. de Silva proposed that Parliament conduct a fresh review of the cigarette tax policy and make a new decision to ensure a fair and effective taxation system that aligns with international standards.

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