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MedNext Journal of Medical and Health Sciences
Articles
DOI: 10.54448/mdnt23205
Submitted: 17-03-2023
Published: 17-03-2023

Taxation formula for tobacco in Sri Lanka

Chairman, National Authority on Tobacco and Alcohol, Colombo, Sri Lanka
Development Officer, National Authority on Tobacco and Alcohol, Colombo, Sri Lanka
Director General, Department of Fiscal Policy, Colombo, Sri Lanka
Head, Health Human Resource Division, Ministry of Health, Colombo, Sri Lanka
Department of Economics, University of Colombo, Colombo, Sri Lanka
Research Economist, Institute of Policy Studies in Sri Lanka, Colombo, Sri Lanka
Tobacco Taxation TESTSiM Model Formula

Abstract

Article 06 of the WHO Framework Convention on Tobacco control emphasizes the importance of implementing effective tax and price policies for Tobacco products. To fight against the Tobacco epidemic WHO has introduced the MPOWER package which R stands for raising taxes on Tobacco. According to WHO standards, 70% of the excise tax from the retail price will contribute to an effective Tobacco tax indexation policy. National Authority on Tobacco and Alcohol organized Tobacco Taxation and Illicit Trade virtual workshop with the collaboration of WHO FCTC Knowledge Hub on Tobacco Taxation, Research Unit on the Economics of Excisable Products, University of Cape Town. The developed Tobacco tax indexation formula of the National Authority on Tobacco and Alcohol was modified by including exogenous factor with the guidance of experts of WHO FCTC Secretariat Knowledge Hub on tobacco taxation. Tobacco tax simulation modeling can be used to predict how much tobacco consumption will decrease, and government revenue will increase if there is a change in the tobacco excise tax structure and an increase in the level of taxation. Preliminary evidence from the TETSiM model predicts that a 91.6 to 124.6 billion increase in tobacco excise taxation from the current 2022 to 2026 would lead to a 1.1 % drop in consumption and approximately 101.8 to 136.9 billion increases in government revenue. The finding of the modeling of Tobacco taxes with the TETSiM model will lead to an increase in Tobacco tax revenue and decrease Tobacco consumption in Sri Lanka.

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How to Cite

Rajapaksa, S., Wanninayake, A., Senanayake, K., Silva, D., Amirthalingam, K., & Weerasekera, H. (2023). Taxation formula for tobacco in Sri Lanka. MedNEXT Journal of Medical and Health Sciences, 4(2). https://doi.org/10.54448/mdnt23205