Revenue leak from smoke tax cuts tops Rs. 25 Bn - Verité Research

The Government has lost more than Rs. 25 billion in potential tax revenue since 2025 due to cigarette (smoke) taxes remaining below the benchmark recommended by the World Health Organization (WHO), according to Verité Research.

The WHO recommends that taxes account for at least 75% of the retail price of cigarettes. Sri Lanka last came close to this benchmark in 2018, when the tax share stood at 74%, but it has since declined to 67% from 2025 onwards.

According to Verité Research, the revenue loss exceeded Rs. 8 billion during the first six months of 2026 alone.

To monitor these fiscal losses in real time, Verité Research has launched the Cigarette Tax Leakage Tracker, an online dashboard that estimates tax revenue foregone on a minute-by-minute basis. The tracker is available on PublicFinance.LK, the organisation's platform for public finance insights and analysis.