Business
Why the Government Should Increase Tobacco Taxation in the Forthcoming Budget
A Win-Win Strategy:
by Harini Weerasekera
The COVID-19 pandemic has left many economies struggling to revive economic activity and boost growth. Economic stimulus packages of varying sizes, shapes and forms have been disbursed by governments around the world to keep their economies afloat. What this means is that governments of developing countries in particular, face extremely tough fiscal policy choices; in some cases, compelled to spend money that they do not necessarily have.
Sri Lanka is no exception to this. COVID-19 has pushed what was already a high spend-low revenue economy into further fiscal turmoil. IPS has stressed that getting the country’s fiscal house in order is the need of the hour, in order to effectively respond to the pandemic, on top of dealing with an already mounting debt burden.
When government finances are tight, policy solutions that can be leveraged to boost government revenue without threatening growth and which support additional pandemic-related spending in the coming years, are essential. Increasing tobacco taxation is an excellent example.
IPS Study on Tobacco Taxation
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. For example, back in 2019, the government increased excise taxes on tobacco to offset an overall reduction in VAT rates on goods.
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.
Why Cigarette Taxation?
Although tax rates on some types of cigarettes in Sri Lanka have been raised in recent years, the most-sold brand of cigarettes in the country remains affordable according to the World Health Organization (WHO) affordability index. Further, the tax structure for cigarettes is not streamlined, and tax policy changes have been implemented in an ad-hoc manner. What this means is that there is further space to reduce cigarette affordability by using appropriate tax policy. This will ease health costs to the government from tobacco related-illness which can then be redirected towards pandemic related health costs, whilst also securing additional tax revenue in these difficult times.
In order to do this, IPS recommends in our latest study, that the government and related institutions deploy an incremental approach to revising cigarette taxes over the next four years (2020-2023). Sri Lanka currently has a five-tier tax structure for cigarettes based on cigarette length, some of which remain affordable and accessible to the young and poor in particular. Adopting a uniform excise tax system that is periodically adjusted for changes in inflation, in line with the WHO Framework Convention for Tobacco Control (FCTC) protocol, will reduce overall affordability of all types of cigarettes.
Implementing these recommendations will result in Sri Lanka’s government revenue from cigarettes increasing by Rs 37 billion by 2023; cigarette consumption reducing from one billion sticks by 2023; and prevention of 140,000 premature deaths from cigarette consumption in the future.
Additionally, a forthcoming study by IPS finds that the net effect of tobacco control policies on national income is positive, as a result of consumers switching their spending from tobacco products to other goods and services.
A Link between Tobacco Taxation and Illicit Trade?
While industry lobbyists, the world over, are resistant to cigarette tax increases, and argue that increased taxes promote illicit tobacco trade and beedi consumption – the evidence shows otherwise. According to WHO FCTC Knowledge Hub research, there is a negative correlation between illicit trade share and cigarette prices, globally (Figure 1). Instead, it is the existence of informal trade channels, easily crossed borders, weak governance, ineffective customs/tax administration, corruption and complicity of producers/importers, among other reasons, that cause large-scale illicit trade of tobacco. Hence, illicit trade should be controlled through organizational changes in tax administration such as more investigations, more tax and customs officers, and technology, rather than by keeping cigarette taxes/prices low.
Similarly, there is concern that beedi consumption has risen due to tax increases on cigarettes. However, the Alcohol and Drug Information Centre (ADIC) trend surveys over the years have found that there is no pattern of switching from cigarettes to beedi in response to cigarette price increases. However, authorities should consider taxing beedis too; avoiding tax increases on cigarettes, on the other hand, will not aid in reducing consumption of either cigarettes or beedis.
Moreover, controlling the consumption of various tobacco products needs to be tackled using different strategies, as outlined by internationally recognized sources such as the WHO.
Business
The eternal pilgrimage of Hajj: A journey through faith, sacrifice and humanity
Every year, the spiritual compass of the Muslim world turns towards the holy city of Makkah, where millions of pilgrims gather for Hajj — one of humanity’s oldest and most profound journeys of faith.
This year, too, the sacred valleys of Saudi Arabia are filled with the echoes of “Labbaik Allahumma Labbaik” — “Here I am, O Allah, here I am” — as Muslims from every continent respond to a divine call that dates back thousands of years to Prophet Ibrahim (Abraham).
Among them are thousands of Sri Lankan pilgrims, dressed in simple white garments, leaving behind worldly status, wealth and identity in pursuit of spiritual purification and closeness to God.
According to Muslim Affairs authorities, the Kingdom of Saudi Arabia has allocated a Hajj quota of 3,500 pilgrims for Sri Lanka for Hajj 2026, enabling devotees from across the island to undertake the sacred pilgrimage. The annual allocation is determined through agreements between Saudi Arabia and Muslim-majority and minority nations worldwide.
Since early this month at the Bandaranaike International Airport in Katunayake, emotional scenes unfolded as families bade farewell to departing pilgrims with tears, embraces and prayers.
Elderly parents clutched prayer beads, children waved anxiously, while relatives sought blessings from loved ones embarking on the once-in-a-lifetime spiritual journey.
For many Sri Lankan Muslims, performing Hajj is not simply travel — it is the fulfilment of a lifelong dream nurtured through years of prayer, sacrifice and savings.
In villages, towns and cities across Sri Lanka, preparations for Hajj often begin months or even years in advance. Some families save gradually over decades, while elderly pilgrims regard the journey as the culmination of a lifetime of devotion.
Hajj is the fifth pillar of Islam and is obligatory for every financially and physically able Muslim at least once in a lifetime.
Yet the pilgrimage is far more than a religious obligation.
It is a journey deeply rooted in the story of Prophet Ibrahim, known as Abraham in Christianity and Judaism, and revered across the Abrahamic faiths as a towering symbol of faith, obedience and sacrifice.
Islamic tradition recounts how Prophet Ibrahim was commanded by Allah to leave his wife Hajjar and infant son Ismail in the barren desert valley of Makkah. With unwavering faith in God’s wisdom, Ibrahim obeyed.
Left in the scorching desert with little water or food, Hajjar desperately searched for water for her thirsty child, running seven times between the hills of Safa and Marwa.
Her determination, courage and trust in God are immortalised in the rituals of Hajj today.
Pilgrims reenact Hajjar’s desperate search by walking between Safa and Marwa, symbolising perseverance, faith and hope even in moments of despair.
According to Islamic belief, Allah answered Hajjar’s prayers by causing the miraculous Zamzam well to spring forth beneath baby Ismail’s feet — a well that continues to provide water to millions of pilgrims centuries later.
Another defining moment in Ibrahim’s story is commemorated during Hajj and Eid-ul-Adha — the willingness of the Prophet to sacrifice his beloved son in obedience to God’s command.
As Ibrahim prepared to carry out the sacrifice, Allah replaced Ismail with a ram, signifying that faith, sincerity and submission were greater than the act itself.
The symbolic stoning of the devil during Hajj recalls Ibrahim’s rejection of Satan’s temptations that sought to discourage him from obeying God.
Thus, every ritual of Hajj carries profound historical and spiritual meaning.
The pilgrimage is not simply movement through sacred spaces; it is a reenactment of timeless lessons in obedience, sacrifice, patience and devotion.
One of the most remarkable aspects of Hajj is the extraordinary equality it represents.
Pilgrims, regardless of nationality, race, language or social class, wear the same simple white attire, known as Ihram.
Presidents, businessmen, labourers and farmers stand side by side in prayer, under the blazing Arabian sun, erasing worldly distinctions and affirming the Islamic belief that all human beings are equal before God.
Religious scholars often describe Hajj as the world’s greatest annual demonstration of unity and humility.
The spiritual climax of the pilgrimage occurs at the plains of Arafat, where pilgrims spend hours in prayer and repentance seeking divine forgiveness.
Many Muslims believe that a sincerely accepted Hajj cleanses a believer of past sins and marks the beginning of a spiritually renewed life.
Upon returning home, pilgrims are honoured with the title “Hadji” or “Hajji,” a distinction that carries immense respect within Muslim communities, including in Sri Lanka.
Traditionally, a Hadji is viewed as someone who has fulfilled one of Islam’s most sacred obligations and returned with heightened spiritual responsibility.
However, Islamic scholars emphasise that the title is not merely ceremonial.
“The true significance of becoming a Hadji lies in personal transformation,” a Colombo-based Islamic scholar said.
“A pilgrim is expected to return with greater humility, compassion, honesty and social responsibility. Hajj is not about status; it is about becoming a better human being.”
Across Sri Lanka, mosques have been conducting special prayers for pilgrims, while families gather to seek blessings before departure.
The pilgrimage season also creates a unique emotional atmosphere within Muslim communities, where neighbours visit departing pilgrims and homes become centres of prayer and reflection.
Saudi Arabia has introduced extensive arrangements this year to facilitate the pilgrimage, including digital crowd management systems, improved transport networks, upgraded accommodation and enhanced healthcare services.
Sri Lankan diplomats and officials, stationed in Saudi Arabia, have been coordinating closely with Saudi authorities to ensure the welfare and smooth movement of Sri Lankan pilgrims throughout the pilgrimage period.
Sri Lanka’s Ambassador to Saudi Arabia, Ameer Ajwad, recently inspected facilities in Mina, prepared for Sri Lankan pilgrims, and reaffirmed efforts to provide a safe and spiritually fulfilling Hajj experience.
As millions circle the Holy Kaaba in prayer, Hajj continues to stand as one of the most extraordinary gatherings on Earth — a timeless spiritual movement connecting humanity across borders, cultures and generations.
For Sri Lanka’s pilgrims, the sacred journey is not merely a passage to Makkah.
It is a journey into the soul — a return to the eternal lessons of Prophet Ibrahim, Hajjar and Ismail — lessons of sacrifice, endurance, obedience and unwavering faith that continue to inspire humanity centuries later.
By Ifham Nizam
Business
‘Green Chilies’ returns after seven years to reignite Sri Lanka’s advertising industry spirit
After a seven-year hiatus, one of Sri Lanka’s most loved advertising industry gatherings is making a much-anticipated return. Green Chilies 2026, the iconic festival that once defined the fun, camaraderie and creative spirit of Sri Lanka’s advertising fraternity, returns on 4th June 2026 at Rise Up, Colombo 03, bringing together professionals from across agencies, media, digital, production and marketing for an evening of celebration, entertainment, and industry camaraderie.
Originally launched in 2011, Green Chilies was conceived as a platform to celebrate Sri Lanka’s Young Lions winners as they embarked on their journey to represent the country at the prestigious Cannes Lions International Festival of Creativity, while also creating a unique opportunity for the industry to come together outside boardrooms and deadlines.
This year’s revival comes at an especially meaningful time, as an entire new generation of industry professionals have entered the business without ever experiencing the culture and energy that made Green Chilies such a defining event. Some key highlights will be the recognition of the winners of the young Lions competition and the much-loved return of The Agency Idol, the wildly entertaining competition where agencies battle it out on stage in a spirited showcase of talent, humour, and creativity, bringing back one of the event’s most iconic traditions.
Speaking about the return of the festival, Ranil de Silva, Founder of Green Chilies and of Metal Factor, said: “When we first launched Green Chilies, the idea was simple. It was to celebrate our Young Lions and create something that brought the industry together as one community. Over the years it became far more than an event, it became part of our industry culture. Seeing it return after seven years is very special, particularly because so many young professionals will now get to experience the spirit that made this industry such a fun and inspiring place to be.”
Green Chilies 2026 is organized by Metal Factor and supported by the 4A’s Sri Lanka.
Event Details:
Venue: Rise Up, Alwis Place, Colombo 03
Date: Thursday, 4th June 2026
Time: From 6.30 PM onwards
Contact : Shelley +94 77 342 3123
Business
JKH posts 75% EBITDA growth to Rs.80.01 billion as recent investments begin to contribute
John Keells Holdings PLC (JKH) reported a strong financial performance for FY2025/26, with Group EBITDA increasing 75% to Rs.80.01 billion, reflecting the contribution of investments made over the past several years and the continued performance of the Group’s established businesses.
Group recurring EBITDA increased 71% to Rs.78.05 billion, compared to Rs.45.69 billion in the previous year, driven primarily by Retail, Transportation and Leisure. Recurring profit before tax rose 143% to Rs.35.72 billion, while recurring profit attributable to equity holders of the parent increased 155% to Rs.13.24 billion.
The year also marked the culmination of the largest investment phase in the Group’s history, with the operationalisation of key investments signalling a shift in the capital cycle from development to contribution. Overall funding requirements reduced materially in line with expectations, while net debt to EBITDA stood at approximately 2 times and net debt to equity at approximately 31%.
City of Dreams Sri Lanka recorded positive EBITDA for the full year, following the completion and launch of the remaining components of the integrated resort. Cinnamon Life’s conference and event spaces attracted interest from local and international organisers, while casino operations showed an encouraging pick-up from the fourth quarter onwards.
Colombo West International Terminal, the project company of WCT-1, recorded strong throughput growth during the year, supported by an improving volume mix. The business delivered a positive profit after tax ahead of expectations, despite recognising depreciation relating to phase 1, and has reached full utilisation of phase 1 capacity based on its latest monthly run-rate.
John Keells CG Auto recorded an exceptional year, supported in part by pent-up demand and the brand positioning and vehicle range of BYD.
The Supermarket business recorded approximately 14% growth in same store sales, driven primarily by a 14.3% increase in footfall. The Beverages and Confectionery businesses recorded strong volume growth, with Beverages benefiting from higher margins, while Confectionery margins were impacted by higher raw material costs and expenses linked to new product introductions.
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