Specific taxes, price hike sought

PROGGA (Knowledge for Progress) and Anti-Tobacco Media Alliance (ATMA) have called upon the government to introduce a tier-based specific supplementary duty to raise the prices of cigarettes in the upcoming national budget for FY24.

The research and advocacy organisations made the demand during a pre-budget press conference on tobacco taxation and prices, held at the National Press Club on Saturday.

At the programme, speakers particularly urged the policymakers to hike the retail price of the low-tier cigarettes to Tk 55 from TK 40 for 10 sticks, followed by TK 35.75 as specific supplementary duty (65 per cent of the final retail price).

They added that compared to other cigarette tiers, hiking prices at the low tier encourages the low-income demographic (users of such brands) to quit smoking. A simultaneous price hike at the higher tiers also decreases the likelihood of users switching to cheaper brands.

Reforming the tax system by introducing a specific tax, as recommended by the WHO (and as employed in most countries worldwide), would further reinforce the effectiveness of the tobacco tax system.

Supporting the budget proposals tabled during this event, eminent economist and convener of the National Anti-Tobacco Platform, Dr Qazi Kholiquzzaman Ahmad said, “As per the conditions set by the IMF for its loan package, Bangladesh needs to raise the revenue by at least an additional 0.5 percent of its GDP in the next FY.

“This means an additional TK 65,000 crore in revenue needs to be earned in FY 2023-24. By hiking the prices of tobacco products, a considerable portion of the additional amount can be managed.”

He added that the additional revenue earned from tobacco products can also help the government tackle the adverse impacts of the Covid-19 pandemic and the Russia-Ukraine war.

Dr Mahfuz Kabir, research director of Bangladesh Institute of International and Strategic Studies (BIISS), said, “75 per cent of all cigarette users are the consumers of low-tier brands. Unfortunately, the Supplementary Duty (SD) imposed on this tier stands at a mere 57 per cent.

“Raising the number to at least 65 percent would help reduce cigarette use and increase government revenue.”

Speakers also proposed that in the medium-tier of cigarettes, the retail price should be set at Tk 70 from the existing TK 65 for 10 sticks, followed by TK 45.50 as a specific SD. In the high-tier, the retail price and specific SD for 10 sticks should be TK 120 from TK 111 and 78.00 respectively. In the premium tier, the numbers should be TK 150 (prices for 10 sticks) from TK 142 and TK 97.50 (specific SD).

As per the proposal presented during the event for non-filtered bidis, the retail price should be Tk 25 from the existing TK 18 for 25 sticks, followed by Tk 11.25 as a specific SD. In the case of filtered bidis, the retail price for 20 sticks should be set at Tk 20 from Tk 19, to be followed by a Tk 9.00 as a specific SD. Regarding smokeless tobacco, the retail price for 10 grams of jarda should be TK 45 from the existing TK 40, followed by TK 27 as a specific SD.

For 10 grams of gul, the retail price should be TK 25 from TK 20 and supplemented by TK 15 as a specific SD. The budget proposals also suggest imposing 15 percent VAT on the retail prices of tobacco products and continuing the existing 1 percent health development surcharge (HDS).

Speakers added that the implementation of the tax and pricing proposals of anti-tobacco activists would raise TK 9,600 crores in additional revenues and prevent the premature deaths of 4.88 lakh adults and 4.92 lakh youths.

Syed Yusuf Saadat, research fellow at the Centre for Policy Dialogue (CPD); Md Mostafizur Rahman, Bangladesh lead policy advisor at the Campaign for Tobacco-free Kids (CTFK); Mortuza Haider Liton, convener of ATMA; ABM Zubair, executive director at PROGGA and leaders of different anti-tobacco organisations attended the event among many others.