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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.



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Next Meats, Purveyor of the World’s First Plant-based Yakiniku Meats, Is Now in Singapore



The Tokyo-based startup makes its debut in the alt-protein hotspot of Singapore Next Meats has collaborated with Aburi-EN to deliver two new meal sets Made with soybean proteins, the Kalbi contains no chemical additives or animal ingredients


 Media OutReach – 14 April 2021 – Next Meats, a purveyor of the world’s first plant-based yakiniku meats, is making its debut in the alternative protein hotspot, Singapore! The Japanese alternative meat company has collaborated this time with popular Japanese restaurant Aburi-EN, which will offer two types of set meals using the NEXT Kalbi (boneless short rib) for the very first time. Made largely from soy proteins, the NEXT Kalbi contains double the amount of protein and half the fats than that of regular meat and even more, it does not contain any chemical additives or cholesterol due to its lack of animal ingredients. Now, Singaporeans can enjoy yakiniku without the guilt! 

The two new menus available at Aburi-EN are the Kalbi Don Set (S$13.80) and the Stamina Teishoku (S$15.80) — which are available for a limited time only. Next Meats has specifically chosen to work with Aburi-EN as they are a Japanese grilled-meat specialist. The two menus are the culmination of many months of research and development, and they will also be Aburi-EN’s first-ever plant-based dishes.

For the Kalbi Don Set, Next Meat’s Kalbi is grilled and served atop a bowl of fragrant Japanese steamed rice. Equally indulgent, the Stamina Teishoku features the Kalbi stir-fried with cabbage along with egg imported from Okinawa. The meat is then served with fragrant Japanese steamed rice, salad, pickles and miso soup. For both dishes, the meats are glazed with a special homemade sauce that packs an irresistible umami punch.   

 Both the Kalbi Don Set and Stamina Teishoku will be available at all Aburi-EN stores from April to July 2021.

 An advocate of sustainable food production and better food security

 The NEXT Kalbi is one of Next Meats’ innovative offerings, which includes other plant-based delicacies such as the NEXT burger and NEXT gyudon (beef bowl). The company champions the importance of saving the planet and humanity through reducing the emission of greenhouse gases (which is produced from meat consumption and animal agriculture) and utilizing biotechnology to combat protein deficiency.

 Through extensive research and development, Next Meats has culminated the knowhow on using molecular binding to mould vegetable proteins from powder. Buoyed by state-of-the-art, proprietary technologies, the company has successfully created vegan substitutes that replicate the texture of real meat.



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Lanka Hospitals tops healthcare sector in LMD’s Most Awarded Entities



Lanka hospitals, the internationally accredited multiple award-winning healthcare provider, topped the healthcare sector in the Most Awarded list compiled by LMD magazine for 2019/20.

Designed to rank the most awarded entities in Sri Lanka, LMD conducted the research, the first of its kind in Sri Lanka, involving 204 corporate entities, based on the cumulative tally of awards received from 52 awarding bodies between January 2019 to September 2020.

With a total of five awards, securing the overall rank of 67, Lanka Hospitals came first in the healthcare sector.

Deepthi Lokuarachchi, Group CEO, Lanka Hospitals, said three factors contributed towards Lanka Hospitals’ award winning process; profound commitment to quality, service standard in healthcare and the accreditation of Joint Commission International (JCI).

“Our stringent standards for quality have earned accolades and accreditations from numerous national and international agencies. Lanka Hospitals has been in the forefront of healthcare providers since 2009 and, particularly, between 2019 and 2020, we were able to win seven national and international awards including one for environmental management systems”, he said.

As a result of superior facilities, customer care and quality of service Lanka Hospitals offers, a growth was experienced in terms of medical tourists during the Covid-19 pandemic even though the inbound international population was restricted. JCI, a US-based accreditation agency, rates healthcare services based on several criteria related to medical as well as non medical services”, he noted.

In terms of corporate responsibility, Lanka Hospitals focuses on skills development, medical care and donations. Every year, Lanka Hospitals’ nursing school enrolls batches from outside the Western province and upon the successful completion of the course they are offered employment, he added.



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AkzoNobel harnesses AI technology to introduce Dulux Preview Service



AkzoNobel’s Dulux has harnessed the transformative power of machine learning technology and artificial intelligence (AI) to introduce for the first time in Sri Lanka, a new concept that allows customers to accurately visualise their dream space ahead of their next paint job. A first in the industry, the Dulux Preview Service is accessible from a desktop or mobile platform, and enables clients to experiment with different colours, combinations, and themes on the go; enabling informed decisions about what works best for their interiors, a company news release said.

“Gone are the days of lugging around multiple decks of colour cards in an attempt to envision what a new space will look like, or being disappointed on having discovered a better colour scheme right after the walls were painted. The Dulux Preview Service provides a detailed virtual picture of projected living spaces -allowing users to try out over 2000 Dulux colours and multiple instant colour scheming options-, also equipping customers with the confidence to commit to a colour scheme knowing it will transform their space as they envisioned,” it said.

“In just three steps, the revolutionary new feature reduces turnaround time to under 48 hours on working days; making it a no-fuss, no-frill, seamless and hassle-free platform. First, users upload an image of the room or house they want to recolour. Next, a reference image is uploaded, and a colour shade or theme is chosen. Then Dulux colour experts curate the generated results catering to the specific need, and finally, a preview is received for customers to either store or use as recommendations.”

With just a ‘Snap, Preview, and Paint’, the Dulux Preview Service provides clients with the following:

Real-time visualisation. Customers upload a photo onto the platform, and the feature will digitally project how the space will look with the new colours. This allows customers to plan their paint job while taking into account the other furniture or wall fixtures in the room.

Options for multiple colour combinations. The preview service serves up a variety of colour combinations based on the reference image uploaded. Customers can also select from various Dulux colour themes based on the ambience they are looking for, with recommendations even on what other colours would complement the room or energy they are aspiring for.

Personalized recommendations. The tool also takes into account global trends and advice from colour experts to equip users with the best, personalised design recommendations.

Instant accessibility. As an easy-to-use, online tool, the service completely eliminates wait times for assistance from service agents; getting customers to that recreated space much quicker.

For free and customised designs or colour recommendations on how to transform your walls at the click of a button, visit


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