Chairman of the Parliamentary Committee of Public Finance (COPF) MP Harsha de Silva has proposed to the Parliament that a new decision must be taken regarding the tax imposed on cigarettes.
Addressing the Parliament today, MP Harsha de Silva pointed out that currently the revenue generated from cigarette tax for the government is less than that of the revenue generated by the cigarette company.
Stating that a 75 per cent tax must be imposed on cigarettes, which is accepted even by the WHO and UNDP, MP Harsha de Silva said the current methodology followed in Sri Lanka for the imposing of tax on cigarettes was wrong.
“Previously, the Committee stated that the increase in the excise duty on cigarettes cannot be approved without concrete data and called for justification regarding the steps taken to increase the excise duty on cigarettes. It was also pointed out that studies conducted on excise revenue from cigarettes indicate that this calculation method has led to a decline in government revenue while increasing the profits of particular manufacturing companies,” he said.
MP Harsha de Silva went on to say that the calculation of tax for cigarettes was wrong and the tax has been declining in the past years.
“I propose that the government takes a fresh approach concerning the tax imposed on cigarettes. The government states that based on inflation a 4% tax is imposed on cigarettes. They said as inflation is 1.9%, an addition of 4 % amounts to a 5.9% tax on cigarettes. However, COPF pointed out that last year’s inflation was 1.2% and not 1.9% as stated by the government. Therefore, the tax on cigarettes should be 5.2%,” he said.
Pointing out the lack of correct data and calculation methods, the COPF Chairman said this gives rise to discrepancies and hence, proposed that the government take a new decision in Parliament regarding the tax imposed on cigarettes. (Newswire)
