Sri Lanka mulls another tobacco tax hike

ECONOMYNEXT – Sri Lanka is considering another hike in the tobacco tax, and the proposal has been sent for finance ministry observations, Health Minister Rajitha Senaratne said.

Sri Lanka’s President Maithripala Sirisena, the former health minister, has pushed for tighter labelling requirements.

Health Minister Rajitha Senaratne said the tax hike proposal had been sent to the Treasury for observation by the cabinet of ministers.

Current plans are to raise tobacco taxes to 90 percent of the retail price from a little over 70 percent.

Tobacco is addictive and, in technical terms, is said to have ‘inelastic demand’ where a hike in price results in some fall in consumption, but total revenue goes up.

But amid education by groups such as ADIC, tobacco use has fallen over the years.

Tobacco and alcohol users have become easy targets for taxation by the rulers in Sri Lanka.

They are considered ‘ugly people’ in society who cannot protest, and are considered easy game to be taxed according to some analysts. (Colombo/Aug10/2016)

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