NATA wants Govt. to increase cigarette prices

2 November 2011 02:05 pm - 6     - {{hitsCtrl.values.hits}}

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The National Authority on Tobacco and Alcohol (NATA) today urged the government to increase the price of cigarettes by 50 per cent as a means of controlling tobacco consumption and increasing government revenue.

NATA Chairman Carlo Fonseka said by increasing the price of cigarettes government revenue from tobacco would increase by a staggering Rs.16 billion.
 
He said it had been proved the world over that if cigarette prices were increased, total tobacco consumption would fall.

Professor Fonseka said the majority of those who consumed cigarettes were those in the lower income groups and each time we increased the price of a cigarette by 10 per cent, cigarette consumption reduced by five per cent.

“We are persuading the government to increase cigarette prices as it will benefit the government by way of taxes and protecting the people’s health. It is a win-win situation,” Prof. Fonseka said and added that as a first step a Rs.20 cigarette which was

increased by between Rs.1 and Rs.3 last week should be further increased to Rs.30.

He said with people having a larger purchasing power, cigarette prices should also be raised but this had not happened.

According to National Dangerous Drugs Control Board (NDDCB) statistics, tax income from tobacco had increased to Rs.725 billion last year.
 
Verite Research Economist Nishan de Mel said government revenue from tobacco could increase by Rs.16 billion if cigarette prices were raised by 50 per cent and if taxes were also proportionately increased.

“The government should find a reasonable basis to increase cigarette prices,” he said.

Mr. de Mel said with the nominal increase in real GDP there should be an increase in the price of cigarettes as well and added that between 2001 and 2005 there had been a reversal in the trend of cigarette price adjustments and tobacco affordability increases insignificantly as the increase in cigarettes prices was consistently less than the increase in GDP. (Olindhi Jayasundere)

  Comments - 6

  • Fun Thamail Thursday, 03 November 2011 02:11 AM

    Increase the price by 200%, then the consumption should fall by 100%

    Sanath R Thursday, 03 November 2011 05:30 AM

    Price increase is of no use. It is the education on the health hazards of smoking is required to discourage. Useless collecting the revenue on the tax collected since you may need to spend more to treat those are affected.

    Jude Perera Thursday, 03 November 2011 05:43 AM

    What are you people talking. Do you have any idea what price elasticity of demand is ? Tobacco does not have a perfectly price inelastic demand. i.e. people will not buy cigarettes at what ever price. At a point people will reduce consumption. Even though the demand for cigarettes may be price Inelastic do not forget price is not the only thing that effects demand. Disposable income is a major factor. with the increase in prices of fuel cost of living will go up and thus diminish the buying power. couple that with a 50% increase in price of cigarettes will definitely reduce demand. It will in turn definitely effect the revenue to the government: It may reduce consumption but can we afford the reduction in revenue !

    izmie Wednesday, 02 November 2011 02:40 PM

    Why only cigarettes? Alcohol it is the evil of all.

    Bassa Wednesday, 02 November 2011 02:55 PM

    Please increase tobaco taxes by 200%. Stop alchol sales inall the outlets otherthan Tourist hotels.

    Lakmal Wednesday, 02 November 2011 02:59 PM

    All of these price increases have to do with increasing government revenue.

    How do people have an increase in purchasing power when wages and salaries do not increase?


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