Finance Minister Muhith goes tough on bidi

Finance Minister AMA Muhith has fixed the tax inclusive price of 25 sticks of non-filter bidi at Tk 15 and 20 sticks of filter bidi, also at Tk 15.

The rates will be effective from Thursday.

No notable reforms or changes in tax structures of the bidi sector have been brought about for the last couple of years, Muhith said.

Due to its easy availability and existing duty structure, a large number of people smoke this product and become vulnerable to health risk, Muhith said.

"Taking all these factors into consideration, I am proposing to abolish the existing tariff value of bidi."

Bangladesh is one of the first signatories to WHO Framework Convention on Tobacco Control.

Considering the health-risk and harmful effects of tobacco products, Bangladesh is committed to reducing the use of tobacco and maintaining compliance with global anti-smoking policy, according to Muhith.

"Maximising revenue collection from this sector has become a challenge."

For the last two years, the National Board of Revenue is gradually moving away from this practice of price fixing and working towards shifting to a uniform tax rate irrespective of prices.

The market share analysis of the low segment cigarette for the past few years suggests that the domestic cigarette manufacturing companies are gradually losing their share of the market. On the other hand, the multinational companies are capturing this market.

Employer fills up empty sticks at a bidi factory in Rangpur. Photo: Reuters

If this trend continues for another two years, the domestic industries will be completely eliminated from the market, Muhith said.

Moreover, the brands marketed by the multinational company in the low segment are in fact the top and popular brands in other countries. This has created uneven competition in the market.

Muhith also fixed the price of the low segment for every 10 sticks of local brand cigarette at Tk 27, up from Tk 23 and increased supplementary duty to 52 percent from 50 percent.

At the same time, Muhith introduced and fixed the price of the low segment for every 10 sticks of international brand cigarette at Tk 35 and supplementary duty at 55 percent.

However, he has not increased any price or supplementary duty for the medium and high-segment cigarette brands which are currently being sold at Tk 45 and above.