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Will the Increase in Cigarette Taxes Meet Budgeted Revenue?

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
60mm- 67mm 28.85 34.62 5.77
67mm- 72mm 41.1 49.32 8.22
72mm- 84mm 46.6 55.92 9.32
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.





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