Illicit fags incur annual loss of Rs.18Bn as revenue to govt. – Study

The illicit cigarette trade in Sri Lanka has incurred a staggering loss of Rs.18 billion to the government as tax revenue every year, the latest results of an academic research was revealed today.

A baseline study on the illicit cigarette market in Sri Lanka, a comprehensive research and the first of its kind in the country carried out by three senior academics of the Open University of Sri Lanka (OUSL) and the University of Kelaniya was unveiled by the experts at OUSL Senate Room today.

The study basically discusses how illicit cigarettes enter the local market, such as through container loads of numerous import goods that arrive in great numbers in the port and individually being smuggled in by foreign expatriate workers and carriers concealed in their baggages.

Dr. S. N. Morais of Department of Social Studies of the OUSL, Prof. S. S. Colombage (Emeritus) of the Department of Social Studies of OUSL and Dr. C. N. Wickramasinghe of Department of Commerce and Financial Management of University of Kelaniya who undertook the study formally handed over the report to Vice Chancellor OUSL Prof. S. A. Ariadurai.

Explaining the objectives of the research Dr. Morais said the research report is intended to provide independent observations on the prevalence and consequences of the illicit cigarette trade in the country.

“The scope of the study is confined to assessing the extent of the market share of illicit cigarettes in Sri Lanka and to estimate the tax revenue loss to the government on account of such trade,” he said.

The study has been mainly based on observational methodology which relied on material evidence collected from statistically-unbiased field surveys.

Observations had been made in several selected districts including Colombo, Gampaha, Kalutara, Galle, Matara and Ampara where statistical data were gathered based on the surveys of cigarette butt collection, empty packs, test purchase and smoker surveys.

As per these data, the academics predict a loss of Rs.17.93 billion as tax revenue to the government is incurred annually, in consideration of tax generated from the legitimate cigarettes manufacturing industry in the country.

The event was attended by senior law enforcement agency officials including Police Special Task Force, Excise Department, Sri Lanka Customs, SL Army and also representatives of Ceylon Tobacco Company. (Kurulu Koojana Kariyakarawana)