Tax on Cigarettes is proposed to be increased with immediate effect. As a result, the price of a cigarette will increase by Rupees five (5).
Further, subsequent to the budget speech, the government changed the excise taxes on cigarettes.
However, of the LKR 5 increase in price per cigarette proposed, the government will only receive LKR 2.47 in tax revenue per cigarette. The remaining LKR 2.53 will be the revenue earned by CTC from the price increase.
There is a 50% decline in taxes on Cigarettes, not exceeding 60 mm in length on one type of cigarette, which results in only a 2.38% increase in the effective tax rate on cigarettes. This means that in effect cigarette taxes have declined in real terms