Price, tax hike can propel cigarette revenue by Tk10,000cr

Unnayan Shamannay, a pro-people research and advocacy organisation, proposed increasing cigarette prices and taxes to tame people’s consumption without affecting government revenue collection.

The think tank also said by implementing new prices, government revenue from cigarette sales will increase by Tk 10,000 crores, which would be 28 per cent higher than the previous year.

Unnayan Shamannay President and former governor of the central bank Dr Atiur Rahman made the remarks while addressing a pre-budget discussion on effective tax on cigarettes held at Dhaka’s Bangla Motor on Thursday.

Unnayan Shamannay Research Director Abdullah Nadvi presented the keynote, while Head of Programmes Shaheen Ul Alam moderated the event.

Dr Atiur Rahman said, “Prices of low-end cigarettes are proposed to increase by 33 per cent, medium-end by 19 per cent, high-end by 15 per cent and premium by 13 per cent.

“Reduction of excise duty on low-end cigarettes from 58 per cent to 63 per cent and other grade cigarettes by maintaining the previous rate of 65 per cent will result in higher taxes than before, amounting to Tk 10,000 crore.”

He added that by implementing these steps, cigarette consumption will decrease to 15.1 per cent from 13.80 per cent.

Terming the proposal as a cost-effective step towards a tobacco-free country by 2040, Dr Atiur Rahman said, “The retail price of bidi and smokeless tobacco products [such as jorda and gul] should be increased to a significant extent, and supplementary duty should be levied on these also at incremental rates.

“Our tax to GDP ratio is around 9 per cent, and it should be 13 per cent. To do that we should increase our tax net and ensure taxation for everyone,” said Professor and former chair in the Department of Development Studies at the University of Dhaka M Abu Eusuf.

Economics Department Professor at the University of Dhaka Muhammad Shahadat Hossain Siddiquee said, “Tax increase is proposed only for low end cigarettes while high and premium cigarettes are still at the same tax.

“Cigarettes are such products if the price increases the demand will not be low. We should follow the global standard of 75 per cent tax for cigarettes to tame its usage among people.”

The experts also emphasised on cut incentives for tobacco production, encouraged farmers to produce different crops instead of tobacco, spoke in favour of increasing surcharge from 1 per cent to 2-3 per cent, and evaluating NBR's rate-based tax structure.

Lawmakers Anima Mukti Gomez, Awlad Hossain, Jannat Ara Henry, Nazma Akhter, and Biren Sikder also attended the discussion.