CPD for single universal taxation for cigarettes

The Centre for Policy Dialogue (CPD) has suggested the government eliminate the existing tier-based cigarette taxation and replace it with a single universal system in the FY24 budget.

Besides, a specific excise duty of Tk 10 per stick should be implemented instead of an ad valorem tax, it said in its recommendations for the upcoming budget unveiled at a programme at its office in the capital on Monday.

“We propose the health development surcharge on cigarettes and other tobacco products be increased from 1 per cent to 5 per cent and the VAT from 15 per cent to 20 cent in FY24,” said CPD Executive Director Fahmida Khatun.

After imposing taxes, the task of setting the retail prices of cigarettes should be left to the market, said the CPD.

Currently, the minimum price of 10 sticks of low-tier cigarettes is Tk 40, including a supplementary duty of 57 per cent.

Besides, the minimum price of 10 sticks of mid-tier cigarettes is Tk 65, high-tier cigarettes Tk 111, and premium-tier cigarettes Tk 142. The prices include a supplementary duty of 65 per cent for all three tiers.

The CPD also proposed increasing corporate tax on all companies manufacturing tobacco products, including cigarette, bidi, chewing tobacco, and tobacco powder, to 50 per cent in FY24 from the existing 45 per cent.

Besides, the surcharge should be increased to 5 per cent from the current 2.5 per cent, it added.