The National Authority on Tobacco and Alcohol (NATA) dismissed assertions by the Ceylon Tobacco Company (CTC) that further taxation or duty increases on tobacco products will drive a significant portion of local consumers toward illicit cigarettes, clarifying that no widespread black market exists in the country to facilitate such a shift.
When contacted by The Daily Morning yesterday (29), NATA Chairperson Dr. Ananda Rathnayaka said that despite the CTC disseminating what he termed 'unscientific data', claiming that an illegal cigarette market of around 34 per cent exists in the country, even a 4 per cent market cannot be identified. He added that the Customs and the relevant institutions are successfully suppressing that fraction as well.
“The World Health Organisation (WHO) has recommended about 75 per cent taxation on tobacco products, yet, in Sri Lanka, it is still around 65 per cent. The WHO has been pressuring the Government for a long period to bring it to the recommended value, despite the Government’s hesitancy. Possible taxation in this context is what has triggered the CTC to execute this propaganda to discourage taxing,” Dr. Rathnayaka said.
He further alleged that even within the estimated 4 per cent illegal cigarette market, a portion is held by the CTC itself. “In order to establish the idea that our illegal market is growing, the CTC itself produces illicit cigarettes under other brands and sends them to us. But, the Customs has successfully busted most of it,” he claimed.
His remarks come against the backdrop of the CTC having warned that repeated Excise hikes are accelerating a shift toward illicit cigarettes, potentially undermining Government revenue. The CTC had also noted that in 2025 around 4per cent of the total tax revenue came from the Company. The Firm had cautioned that the current tax trajectory is distorting the market, widening the price gap between legal and illegal products, eroding the demand for duty-paid cigarettes, and reducing the tax revenue that the Government receives from the industry.