Excise duty increase on cigarettes approved after CoPF review

Officials from the Ministry of Finance presented the steps taken to increase excise duty on cigarettes before the Committee on Public Finance (CoPF) under the Order under Section 3 of the Excise (Special Provisions) Act, No. 13 of 1989.

The presentation was made during the Committee on Public Finance meeting held on March 11, 2025, in Parliament, chaired by MP (Dr.) Harsha de Silva, according to the Parliamentary Communications Department.

The Committee stated that the increase in excise duty on cigarettes could not be approved without concrete data and emphasized the need for justification regarding the steps taken to increase the excise duty, as discussed in the previous Committee meeting.

It was also pointed out that studies on excise revenue from cigarettes indicate that the current calculation method has led to a decline in government revenue while increasing the profits of certain manufacturing companies.

Therefore, the Committee stressed the importance of ensuring that this tax revision would indeed benefit government revenue. Consequently, it was decided to reconsider the matter following further clarifications from Ministry of Finance officials regarding the excise duty increase.

After an extensive discussion, the Committee approved the Order under Section 3 of the Excise (Special Provisions) Act, No. 13 of 1989.

Additionally, two Orders under the Special Commodity Levy Act, No. 48 of 2007, were considered and subsequently approved.

The Order under Section 5 of the Special Commodity Levy Act, No. 48 of 2007, published in Gazette Extraordinary No. 2417/20, sought to extend the validity period of the Special Levy imposed on 63 commodities, including essential food items, at the same rates after obtaining recommendations from the relevant line ministries.

The Order under Section 5 of the Special Commodity Levy Act, No. 48 of 2007, published in Gazette Extraordinary No. 2421/03, sought to grant tax concessions for dates imported for free distribution during the Ramadan fasting period, the statement highlighted.

The Committee on Public Finance also considered and approved the protocol amending Section 28(6) of the Agreement between the governments of Sri Lanka and India for the avoidance of double taxation and the prevention of fiscal evasion with respect to income taxes. This agreement was signed at the government level in India on 16th December 2024.

The meeting was attended by Deputy Minister Dr. Harshana Suriyapperuma, along with Members of Parliament Ravi Karunanayake, Dr. Kaushalya Ariyaratne, Wijesiri Basnayake, Arkam Ilyas, Nimal Palihena, and Lakmali Hemachandra, Attorney-at-Law.