A recent study by IPS projects that government tax revenue can be boosted by LKR 37 billion by 2023, if taxes on cigarettes are streamlined and raised in line with inflation. Although the government assumed a policy stance of cutting taxes across the board when they came into power, excise taxation of sin-goods such as cigarettes is one area where it is still politically feasible to raise taxes in order to boost much needed revenue. This month’s budget is therefore an opportune moment to increase tobacco taxation, which will simultaneously help raise revenue at a critical time for the country, and generate significant and positive health benefits that would flow from reducing smoking.
Implementing tobacco control policies to reduce smoking prevalence will enhance the economic well-being of people, particularly the poor, as it would free up more resources for basic needs such as food and education, resulting in a positive gain for the whole economy. For a developing country like Sri Lanka, it is essential to integrate tobacco control measures into poverty alleviation policies and programmes to benefit the individual, the household and the national economy.
In 2017, the government made a commitment to ban tobacco cultivation by end 2020 and launched a programme to discourage farmers from growing tobacco and instead switch to sustainable alternatives. While the transition period of the proposed cultivation ban is nearly over, the programme is currently at a deadlock. This blog examines how tobacco cultivation could weaken the government’s efforts to promote home gardening and why the transformation initiative should be sped up to improve food security during the COVID-19 outbreak.
Reducing Health Costs and Increasing Government Revenue beyond COVID-19: A Case for Raising Cigarette Taxes in Sri Lanka
Increasing and simplifying excise taxes are prescribed by the WHO Framework Convention for Tobacco Control (WHO FCTC) and are the most cost-effective tools that governments can employ to reduce smoking rates. However, the tobacco industry strongly opposes raising taxes on cigarettes. Further, Sri Lanka has some misinformed cigarette taxation practices in place. This blog shows the fallacies in these arguments and practices, and highlights the importance of streamlining taxation policies in the country, with the objective of reducing smoking prevalence and reducing smoking related health costs.
The COVID-19 pandemic has already claimed thousands of lives worldwide. As expected with any respiratory illness, there is clear evidence that smokers are much more vulnerable to COVID-19 than non-smokers. This blog discusses how smokers can make the crisis worse and provides short term policy recommendations that can help control the spread of the disease in Sri Lanka. In particular, the blog makes a compelling case for imposing a temporary ban on cigarette sales in Sri Lanka.