Sri Lanka : Overview of Tobacco Use, Tobacco Control Legislation and Taxation
Sri Lanka ratified the Framework Convention on Tobacco Control in 2003 and implemented some comprehensive tobacco control policies. From June 1, 2015, health warnings on cigarette packages in Sri Lanka have to cover 80 percent of the large sides. I...
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/478361561398136333/Sri-Lanka-Overview-of-Tobacco-Use-Tobacco-Control-Legislation-and-Taxation http://hdl.handle.net/10986/32069 |
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okr-10986-320692021-05-25T09:25:51Z Sri Lanka : Overview of Tobacco Use, Tobacco Control Legislation and Taxation World Bank Group TOBACCO CONTROL LEGISLATION TOBACCO USE TOBACCO TAX CIGARETTE PRICES EXCISE TAX SMUGGLING ILLICIT SALES Sri Lanka ratified the Framework Convention on Tobacco Control in 2003 and implemented some comprehensive tobacco control policies. From June 1, 2015, health warnings on cigarette packages in Sri Lanka have to cover 80 percent of the large sides. In 2005-2006, about 38.0 percent of men and less than 1 percent of women were current tobacco smokers in Sri Lanka. The prevalence smoking among men was about 40 percent in 2005-2006 and decreased to about 32 percent in 2009-2014. The volumes of cigarette production in Sri Lanka were fairly steady at the level of 5.2 billion sticks in the late 1990s, and then the production gradually decreased to about 4 billion cigarettes in 2013-2016. The government has the power to change excise tax rates several times a year. The taxation system used for cigarettes is 5-tier specific. In 2005-2015, excise rates for most tiers were increased by more than 300 percent; however, the inflation rate for those eleven years combined was 260 percent; so, real cigarette prices did not change much. In late 2014, the VAT liability on cigarettes was temporarily removed. For two years, excise was the only tax levied on cigarettes in Sri Lanka. While the excise rates were increased in 2014, the overall tax burden almost did not change. Such a shift between VAT and excise tax was the main factor of the excise revenue increase by 40 percent in 2015 as excise revenue mainly replaced VAT revenue. The largest changes in cigarette taxation in Sri Lanka took place in October-November 2016: (1) Excise rates were increased by 26-28 percent for two higher tiers, by 37-40 percent for two middle ties, and by 67 percent for the lowest tier; (2) The VAT rate was increased from 12 percent to 15 percent, and cigarettes were again made liable for VAT. However, after the increase in cigarette tax burden in late 2016, in the first four months of 2017, the excise revenue from cigarettes and tobacco products declined by 17 percent, and cigarette production decreased by 31 percent. The VAT-excise reverse shift was the main factor of excise revenue reduction in early 2017. The VAT revenue increased, and its increase was larger than the reduction in the excise revenue. Another factor of revenue decline in early 2017 was forestalling: tobacco industry overproduced cigarettes to pay taxes before tax increases. Another factor behind cigarette sales reduction in Sri Lanka was the pricing policy of the tobacco industry. 2019-07-11T20:49:14Z 2019-07-11T20:49:14Z 2017-08-04 Report http://documents.worldbank.org/curated/en/478361561398136333/Sri-Lanka-Overview-of-Tobacco-Use-Tobacco-Control-Legislation-and-Taxation http://hdl.handle.net/10986/32069 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Economic & Sector Work :: Other Health Study Economic & Sector Work South Asia Sri Lanka |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
TOBACCO CONTROL LEGISLATION TOBACCO USE TOBACCO TAX CIGARETTE PRICES EXCISE TAX SMUGGLING ILLICIT SALES |
| spellingShingle |
TOBACCO CONTROL LEGISLATION TOBACCO USE TOBACCO TAX CIGARETTE PRICES EXCISE TAX SMUGGLING ILLICIT SALES World Bank Group Sri Lanka : Overview of Tobacco Use, Tobacco Control Legislation and Taxation |
| geographic_facet |
South Asia Sri Lanka |
| description |
Sri Lanka ratified the Framework
Convention on Tobacco Control in 2003 and implemented some
comprehensive tobacco control policies. From June 1, 2015,
health warnings on cigarette packages in Sri Lanka have to
cover 80 percent of the large sides. In 2005-2006, about
38.0 percent of men and less than 1 percent of women were
current tobacco smokers in Sri Lanka. The prevalence smoking
among men was about 40 percent in 2005-2006 and decreased to
about 32 percent in 2009-2014. The volumes of cigarette
production in Sri Lanka were fairly steady at the level of
5.2 billion sticks in the late 1990s, and then the
production gradually decreased to about 4 billion cigarettes
in 2013-2016. The government has the power to change excise
tax rates several times a year. The taxation system used for
cigarettes is 5-tier specific. In 2005-2015, excise rates
for most tiers were increased by more than 300 percent;
however, the inflation rate for those eleven years combined
was 260 percent; so, real cigarette prices did not change
much. In late 2014, the VAT liability on cigarettes was
temporarily removed. For two years, excise was the only tax
levied on cigarettes in Sri Lanka. While the excise rates
were increased in 2014, the overall tax burden almost did
not change. Such a shift between VAT and excise tax was the
main factor of the excise revenue increase by 40 percent in
2015 as excise revenue mainly replaced VAT revenue. The
largest changes in cigarette taxation in Sri Lanka took
place in October-November 2016: (1) Excise rates were
increased by 26-28 percent for two higher tiers, by 37-40
percent for two middle ties, and by 67 percent for the
lowest tier; (2) The VAT rate was increased from 12 percent
to 15 percent, and cigarettes were again made liable for
VAT. However, after the increase in cigarette tax burden in
late 2016, in the first four months of 2017, the excise
revenue from cigarettes and tobacco products declined by 17
percent, and cigarette production decreased by 31 percent.
The VAT-excise reverse shift was the main factor of excise
revenue reduction in early 2017. The VAT revenue increased,
and its increase was larger than the reduction in the excise
revenue. Another factor of revenue decline in early 2017 was
forestalling: tobacco industry overproduced cigarettes to
pay taxes before tax increases. Another factor behind
cigarette sales reduction in Sri Lanka was the pricing
policy of the tobacco industry. |
| format |
Report |
| author |
World Bank Group |
| author_facet |
World Bank Group |
| author_sort |
World Bank Group |
| title |
Sri Lanka : Overview of Tobacco Use, Tobacco Control Legislation and Taxation |
| title_short |
Sri Lanka : Overview of Tobacco Use, Tobacco Control Legislation and Taxation |
| title_full |
Sri Lanka : Overview of Tobacco Use, Tobacco Control Legislation and Taxation |
| title_fullStr |
Sri Lanka : Overview of Tobacco Use, Tobacco Control Legislation and Taxation |
| title_full_unstemmed |
Sri Lanka : Overview of Tobacco Use, Tobacco Control Legislation and Taxation |
| title_sort |
sri lanka : overview of tobacco use, tobacco control legislation and taxation |
| publisher |
World Bank, Washington, DC |
| publishDate |
2019 |
| url |
http://documents.worldbank.org/curated/en/478361561398136333/Sri-Lanka-Overview-of-Tobacco-Use-Tobacco-Control-Legislation-and-Taxation http://hdl.handle.net/10986/32069 |
| _version_ |
1764475676400812032 |