Anti-tobacco group makes proposals for ‘effective taxation’ in Bangladesh before budget

A group of anti-tobacco campaigners have made their proposals of increasing the prices of tobacco products by implementing “effective” tax measures in the national budget.

They told a press conference in Dhaka on Saturday that tobacco products are becoming cheaper in Bangladesh over time due to faulty taxation.

The tobacco taxation structure is “extremely complex” and due to multiple price slabs and opportunity to purchase tobacco products at different prices, tax and price measures are not working effectively in reducing the use of tobacco, they observed.

These slabs are offering tobacco companies “immense opportunities” to evade taxes by declaring high-tier cigarettes as low-tier ones.

The group said more than 50 percent of tobacco consumers are using smokeless tobacco products while only 0.2 percent of tobacco revenues comes from this sector.

The Campaign for Tobacco Free Kids (CTFK), PROGGA, Anti-Tobacco Media Alliance (ATMA), National Heart Foundation Bangladesh, Dhaka Ahsania Mission, Association for Community Development (ACD), Young Power in Social Action (YPSA), Bangladesh Institute of Theatre Arts (BITA), SUPRO and Tamak Birodhi Nari Jote (TABINAJ) jointly organised the media briefing.

Their four proposals include:

1.Bringing the number of price slabs down to two (low and high) from four: Merge the low and medium tier (35 and 48 taka tiers) under a single tier (low) and high and premium tiers (75 and 105 taka tiers) under another single tier (high). Set the retail price for the low tier at no less than 50 taka per 10 sticks and raise the supplementary duty to 60%. Similarly, set the retail price for the high tier at least 105 taka per 10 sticks and impose 65 percent supplementary duty. At the same time, introduce a specific tax of 5 taka per 10 sticks for all cigarettes tiers.

2.Elimination of price distinction between filter and non-filter bidis: Eliminate the price distinction between filtered and non-filtered bidis. For non-filter bidis, set the retail price at 35 taka per pack of 25 sticks; and impose 45% supplementary duty and add a specific tax of 6 taka. For filter bidis, set the retail price at 28 taka per pack of 20 sticks; and impose 45% supplementary duty and add a specific tax of 4.8 taka.

3.Elimination of Tariff Value System in Smokeless Tobacco (Jarda and Gul): Change the tax base to the retail price alike cigarette and bidi. Set the retail price of 35 taka per 10 grams of jarda and 20 taka for 10 grams of gul. Impose the supplementary duty to 45% of retail price and add a specific tax of 5 taka per 10 grams of jarda and 3 taka per 10 grams of gul.

4.VAT on retail price: A 15% VAT (on retail price) will still be applicable to all tobacco products (smoking and smokeless).

If those proposals are adopted, it will encourage nearly 3.2 million current adult smokers to quit (1.3 million cigarettes smokers and 1.9 million bidi smokers), the group said in a joint statement.

They said implementing those proposals would also reduce the prevalence of cigarette smoking from 14 percent to 12.5 percent and the prevalence of biri smoking from 5 percent to 3.4 percent.

It will also reduce premature deaths by 1 million among current smokers in the long term and generate between Tk 66.80 billion and Tk 119.80 billion (or 0.4% of GDP) in additional tax revenue.

Economist Dr Qazi Kholiquzzaman Ahmad, also chairman of National Anti-Tobacco Platform, said: “We have been pushing for an overhaul of tobacco taxation system for a long time. NBR and other policymakers often express their consent and solidarity with us. However, the reality does not reflect their support for our demand.”

Senior Research Fellow of Bangladesh Institute of Development Studies (BIDS) Dr Nazneen Ahmed, Research Director of Bangladesh Institute of International and Strategic Studies (BIISS) Dr Mahfuz Kabir, and former chairman of the National Board of Revenue (NBR) Nasiruddin Ahmed were the key speakers at the briefing chaired by former vice-chancellor of Dhaka University Prof AAMS Arefin Siddique.

ATMA Convenor Mortuza Haider Liton, its Co-Convenor Nadira Kiron, and PROGGA Executive Director ABM Zubair were also present.

The national budget for 2019-2020 financial year will be placed in the parliament in June.