Cigarette Taxes Need Parliament’s Oversight

Abstract

Every year, on the 31st of May, the World Health Organisation (WHO) and partners mark World No Tobacco Day. This day is set apart to highlight the health risks associated with tobacco use and to advocate for effective policies to reduce tobacco consumption. According to WHO “Tobacco kills nearly six million people each year, of which more than 600,000 are non-smokers dying from breathing second-hand smoke”. This is not just a global problem but also a problem for Sri Lanka. Due to poor management of taxation not only have cigarettes become more affordable, but the tax share of the under-priced cigarettes has also declined. Two things have resulted from that: first, consumption of cigarettes have begun to increase (it went up by almost 10% in 2015). Second, potential tax revenues are being lost to government and transferred as income to the producer. This is both a health issue and an issue of public finance for Sri Lanka. Therefore, this Insight argues that the Sri Lankan parliament has a responsibility to oversee the taxation measures and address the bureaucratic discretion that is eroding the benefits of public health and public finance.