Cigarettes to get costlier as Bangladesh increases taxes in budget

The VAT on cigarette and bidi paper is increased to 15 percent from 7.5 percent

Prices of cigarettes are increasing with a hike in supplementary duty and VAT on these products announced in the national budget for 2024-25 fiscal year.

Finance Minister Abul Hassan Mahmood Ali announced plans to elevate the supplementary duty on cigarettes containing tobacco products, as outlined in the second schedule of the Act, from 65 percent to 66 percent.

This adjustment aims to discourage the purchase and consumption of cigarettes, which is “outright harmful for human health”, the minister said.

The hikes in the rates will also increase government income from this sector, he said.

He also proposed a rise in the value added tax at the local manufacturing stage, specifically targeting cigarette paper and bidi paper, from 7.5 percent to 15 percent, seeking to further discourage cigarette production and usage.

The minister announced an increase in the price level of low slab 10-sticks/pack cigarettes to Tk 50 and higher and supplementary duty to 60 percent. Apart from this, the price level of medium slab 10-sticks/pack cigarettes has been increased to Tk 70 and higher, high slab to Tk 120 and higher and premium slab to Tk 160 and higher and the rate of supplementary duty for these three slabs to 65.5 percent.

ANTI-TOBACCO GROUP DERIDES PROPOSALS

Anti-tobacco group Knowledge for Progress or PROGGA has slated the government for keeping cigarettes and other products within the reach of the people.

It said the price of lowest tier cigarettes has been increased by only Tk 0.50 per stick.

The rates at which the prices have been increased in other tiers will make the products cheaper than essential products, PROGGA said.

Citing government data, it said sugar, potato, flour and many other essential products became costlier by 40-90 percent in two years from 2021.

But cigarette prices have increased by 4.48-11.11 percent in the latest budget, while according to the Bangladesh Bureau of Statistics, per capita income has increased by around 12 percent in 2023-24 fiscal year, compared to the previous financial year.

Deaths and diseases caused by cigarettes and other tobacco products are likely to rise once the budget proposals are passed, said ABM Zubair, executive director of PROGGA.

The budget will also increase the government’s health cost and deprive it of Tk 100 billion revenue.