Cabinet approves 15% VAT on cigarettes

Cabinet approves 15% VAT on cigarettes

September 29, 2016   07:57 pm

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Cabinet has approved the proposal to impose 15% VAT on cigarettes plus increase production tax by Rs. 5 per cigarette, Information Department said a short while ago. 

Surveys have revealed that 15% of persons between 18-69 years are engaged in smoking and about 30,000 die annually due to tobacco related diseases. It has been calculated that government spends about Rs. 72 billion annually to treat such patients. 

The World Health Organization has identified that taxation is a good measure to control the use of tobacco and cigarettes. 

“According to the recommendations made by the Cabinet Committee appointed to consider the joint proposal made by the President Maithripala Sirisena and Dr. Rajitha Senarathne, Minister of Health Nutrition and Indigenous Medicine, to revise taxes on tobacco and cigarettes, the Cabinet has decided to impose 15% VAT on cigarettes again, increase the current production tax from Rs. 5/- for any size cigarette, and to increase the cess on import of beedi leaves from Rs. 2,000/- to Rs. 3,000/- and to take other actions to minimize the tobacco use in the country.”

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