On the 1st of Jan 2023, the government increased excises taxes on cigarettes by 20% as follows:
|Size||Old Excise Tax per Cigarette||New Excise Tax per Cigarette||Tax Change|
|No larger than 60mm||6.75||13.36||6.61|
|Greater than 84mm||51.8||62.16||10.36|
This was done in order to achieve the increased revenue expectations on excise revenue on cigarettes of LKR 140 Bn. However, our calculations show that the 20% increase in cigarette taxes will not achieve the government's revenue target and will fall short by LKR 48 Bn. In order to achieve the targeted revenue 147% increase in excise taxes will be required.