New IPS publication: Tobacco Smuggling in Sri Lanka – A Scoping Study

Dr. Erandathie Pathiraja

Nishamini Ihalagedara

Ruwan Samaraweera

A new study by the Institute of Policy Studies of Sri Lanka (IPS) has revealed that cigarette smuggling occurs in various forms across the country and a better understanding of these channels is necessary to develop policies that will curb smuggling, increase government revenue and minimise the adverse health impacts.

Despite the high excise taxes aimed at curbing tobacco use, smuggling continues to undermine public health efforts and government revenue from tobacco sales. The IPS study titled ‘Tobacco Smuggling in Sri Lanka – A Scoping Study’ highlights how illegal trade allows cigarettes to be sold at lower prices, making them more accessible—especially to the youth and low-income groups. 

“Smuggled cigarettes bypass health warnings and taxes, making them cheaper and more dangerous,” said the study’s lead author and IPS Research Fellow Dr. Erandathie Pathiraja. 

“This not only increases healthcare costs but also deprives the government of crucial revenue,” IPS Researchers Nishamini Ihalagedara and Ruwan Samaraweera said.

Ihalagedara and Samaraweera co-authored this publication with Dr. Pathiraja, to bring to light the socioeconomic issues caused by the illegal tobacco trade. 

The study finds that the official customs data on seized cigarettes does not support the public narrative that high taxes increase the smuggling efforts. The seized volumes do not consistently change with the tax rates. Alternatively, the study highlights that many factors like corruption and weak border controls contribute to smuggling. 

Drawing upon the global best practices, the study advocates for urgent measures to enhance enforcement and modernise the tracking systems through the implementation of digital excise tax stamps, incentives for public reporting and improvements in border control. 

Stronger enforcement and increased public engagement are essential to address this issue, with technological advances and transparency supporting all related efforts.  

The publication can be download on the IPS website: www.ips.lk/tobacco-smuggling-in-sri-lanka-a-scoping-study-2025/