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 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 youth and low-income groups.

“Smuggled cigarettes bypass health warnings and taxes, making them cheaper and more dangerous,” said Dr Erandathie Pathiraja, lead author of the study and IPS Research Fellow. “This not only increases healthcare costs but also deprives the government of crucial revenue.” IPS Researchers Nishamini Ihalagedara and Ruwan Samaraweera co-authored this publication with Dr Pathiraja, to bring to light the socioeconomic issues caused by illegal tobacco trade.

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

Drawing upon global best practices, the study advocates for urgent measures to enhance enforcement and modernise 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 addressing this issue, with technological advances and transparency supporting all related efforts.

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