Sri Lanka loses over 25bn rupees in cigarette tax revenue

Sri Lanka lost more than 25 billion rupees in potential tax revenue since 2025 because cigarette taxes fell below international recommendations.

Verité Research, a local policy think tank, revealed the details, highlighting that the state lost over 8 billion rupees during the first six months of 2026 alone.

The World Health Organisation recommends that taxes make up at least 75 percent of the retail price of cigarettes to discourage smoking and secure state funds.

Sri Lanka last approached this target in 2018, when tobacco taxes reached 74 percent of the retail price.

However, that share since declined and remained stagnant at 67 percent since 2025, costing the treasury dearly.

To track this fiscal slip-up, the think tank launched an online dashboard called the Cigarette Tax Leakage Tracker on its PublicFinance.LK platform.

The tracker calculates the squandered revenue on a minute-by-minute basis, giving policymakers and the public a transparent look at the cost of weak tax decisions.