According to provisional data, the government revenue from the tobacco industry is set to dip by Rs.2.7 billion or 3.1 percent year-on-year to Rs.86 billion.

In 2016, the tax revenue from tobacco grew 12.46 percent YoY and government excise earnings alone from tobacco was Rs.57 billion in 2014 before it peaked to Rs.88.7 billion in 2016.

Cigarette monopoly player in the country, Ceylon Tobacco PLC (CTC), attributes the reduction in government revenue to the unprecedented 40 percent drop in volumes last year due to the significant increase in price of sticks in the last quarter of 2016.

At pre-October 2016, the government would have earned a record Rs. 105 billion from CTC during the year that ended, officials say.

In order to combat smuggling of illicit cigarettes, the government through the Budget 2018 proposed to issue new licenses to import cigarettes while clamping down on smuggling.