Cigarette production in the country has fallen by 32% between 2022 and 2025, following successive increases in taxes imposed on tobacco products, Economic Development Deputy Minister Nishantha Jayaweera told Parliament yesterday (20).

The Deputy Minister made the disclosure in response to a question raised by Parliamentarian Dayasiri Jayasekara.

According to Deputy Minister Jayaweera, cigarette production declined from 2.8 billion sticks in 2022 to 1.9 billion in 2025, reflecting the impact of the Government’s tobacco tax policy. 

He said the policy was introduced not only to increase government revenue but also to reduce healthcare costs linked to tobacco use and other negative socio-economic impacts. 

Since 2023, excise duties on cigarettes have been increased on four occasions, while VAT and corporate income tax rates have also been revised.

Excise duty was increased by 20% on 1 January 2023, and by a further 20% on 1  July 2023. It was subsequently increased by 14% on 1 January 2024, under the inflation indexation mechanism, and by another 5.9% on 11 January 2025.

Meanwhile, VAT was increased from 15% to 18% from 1 January 2024, while the corporate income tax rate was raised from 40% to 45% from 1 April 2025. 

The current excise duty on cigarettes, effective from 11 January 2025, is based on cigarette length, with duties ranging from Rs 26.59 to Rs 109.95 per cigarette.

The Deputy Minister said the higher tobacco taxes have contributed to a gradual increase in direct and indirect tax revenue, while also supporting efforts to protect public health and improve government revenue management.