Govt. excise revenue droped due to high taxation on tobacco products
Finance Minister Ravi Karunanayake said there was a huge loss of government revenue due to the excessive taxation of tobacco products. He said he could not mention the exact amount, yet there was definitely a huge loss.
However, the Minister said it was a policy decision by the government to increase taxes as a means of discouraging smoking habit.
“We, as a government, are happy if smoking is discouraged,” he said.
However, he said other products such as Beedi and illegal cigarettes had flooded the market as a substitute. In this manner, he said, the sales of tobacco products take place without any revenue being generated for the state.
“I, along with the President, the Prime Minister and the Health Minister, will discuss the matter and try to sort it out,” he said.
Meanwhile, sources close to the industry said the Governments excise revenue had dropped by 50% due to high taxation. The Government incurred losses over Rs.15 billion revenue during the first quarter of 2017.
If trend continues, this would be a loss of over Rs.50 billion for the year. The above is an approximate loss of Rs. 5 billion in tobacco excise revenue per month.
As many as 35 million illicit sticks were detected at approximately Rs. 1.7 billion.
According to sources, the smoking rate has increased as a result of the freely available contraband. On one occasions earlier, at least 30,000 small bottles of snuff and 2,000 kilos of Beedi leaves worth Rs. 8 million were seized by the customs officials at the Peliyagoda container yard earlier.
It is learnt that though the government is contemplating a ban on loose cigarette sales, there is no final agreement on it. As many as 95 percent of cigarette sales come from loose cigarettes. The authorities contemplate whether the ban on loose cigarettes will further reduce revenue .
As many as 95 percent of cigarette sales come from loose cigarettes. The authorities contemplate whether the ban on loose cigarettes will further reduce revenue