2 November 2011 02:05 pm
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)