A market assessment conducted by the non-governmental research organisation Unnayan Shamannay found that the government is counting huge losses in earning revenue due to the substantial gap between the declared price and the market price of cigarettes.
In the current tax structure, cigarettes are sold in four tiers and each of these tiers has a fixed minimum declared price.
But, practically, both single-stick cigarettes and cigarette packets are currently being sold at a higher price than the market price.
The cigarette companies pay taxes to the government according to the declared price, but consumers are buying cigarettes at a higher price.
“The government isn’t receiving any revenue from this additional expenditure,” a press release by Unnayan Shamannay reads.
The results of the assessment were unveiled through a virtual discussion titled “Impact of the Gap Between Declared Price and Market Price on Government Revenue.”
The panellists of the discussion session included Senior Research Fellow of the Bangladesh Institute of Development Studies (BIDS) Dr S.M. Zulfiqar Ali, Research Director of Centre for Policy Dialogue Dr Khondaker Golam Moazzem and Chief Business Reporter of Ekattor TV, Sushanta K. Sinha. Unnayan Shamannay’s Head of Programmes Shaheen ul Alam moderated the discussion session.
The results of the market assessment were presented by the Lead Economist of Unnayan Shamannay Mr. Robert Shuvra Guda.
He said: “Due to the gap between the declared price and the market price, the government is losing revenue worth almost BDT 56.6 billion.”
Quoting the study, Robert Shuvra Guda said: “For a 20-stick packet, consumers on average pay an additional eleven and a half taka for low-tier cigarettes, around fifteen and a half taka for medium-tier cigarettes, and around ten and a half taka for high-tier cigarettes.”
“But the gap is biggest for premium-tier cigarettes, which has been observed to be sold for twenty-four taka more than the declared price on average. As a result, the government is losing a huge amount of potential revenue,” he added.
Based on the results of this small-scale survey, some reforms were suggested for the taxation policy which includes setting the minimum declared price above the current market price in the 2023-24 fiscal year, to bring the retail price of the low-tier and medium-tier brands at the same level and instead of the current four-tier system implementing a two-tier system.
In the open discussion session, representatives from the Bureau of Economic Research of the University of Dhaka, Dhaka Ahsania Mission, and Work for Better Bangladesh expressed their opinions. Apart from them, journalists and representatives from anti-tobacco organisations were present at the event.
