Bangladesh Anti Tobacco Alliance (BATA) and Bangladesh Network for Tobacco Tax Policy (BNTTP) on Tuesday (11 May 2021) demanded of the government to impose specific tax on tobacco products from the next fiscal year (FY22) instead of pursuing the existing ad valorem system.
Under the existing system, the price fixation and tax imposition of tobacco products are increasing the profits of the tobacco companies in an unexpected way.
This was revealed at a virtual joint press conference by BATA and BNTTP. Dhaka University Economics Department Associate Professor SM Abdullah read out a written speech at the virtual conference featuring various demands.
Chaired by coordinator of BATA Saifuddin Ahmed, former chairman of NBR Dr Nasiruddin Ahmed, project director of Bangladesh Cancer Society Prof Dr Golam Mohiuddin Faruq, Dhaka University Economics Department Prof and BNTTP Convenor Dr Rumana Haque spoke, among others, at the press conference. Aid Foundation project director Sagufta Sultana moderated the press conference.
SM Abdullah said the existing ad valorem taxation system on tobacco products is faulty and erroneous. As a result, although there has been increase in the price of tobacco products, the number of tobacco consumers is not declining at an expected level as well as the revenue collection of the government is also not increasing significantly. “Rather, the income of the tobacco companies is increasing at an unexpected level.”
Former NBR Chairman Dr Nasiruddin Ahmed said that specific taxation system is in place on tobacco products in some 76 countries while uniform tax system on tobacco products is also in operation in some 115 countries.
This means that all cigarettes are being sold in those countries at a single rate and there is no price tier, he said, adding that tax on tobacco products is being imposed and realized in Bangladesh under ad valorem method unlike other countries of South Asia.
Highlighting the benefits of specific taxation as well as such successes in Thailand and Sri Lanka, Nasiruddin said that it is possible to impose specific tax on all kinds of tobacco products as per the section 15(3) and 58 of the Value Added Tax and Supplementary Duty Act, 2012.
Dr Rumana Haque said the countries which became successful in anti tobacco campaign have followed the specific taxation system on tobacco products instead of the ad valorem system.
It was informed in the press conference that tax hike on tobacco products would protect public health. The leaders of BATA and BNTTP said that if their tax related proposals on tobacco products for the next fiscal year is implemented, then some 11 lakh adult smokers would quit smoking while some 8 lakh youths would feel discouraged to start smoking. Side by side, the government revenue will increase by Taka 3,400 crore.
Our other tax related proposals on tobacco include fixing the retail price of 10 cigarettes at Taka 50 at low tier, Taka 70 at mid tier, Taka 110 at high tier, Taka 140 at premium tier and thus imposing specific supplementary duty of Taka 32.50, Taka 45.50, Taka 71.50 and Taka 91 respectively.
Besides, we also demanded for fixing the retail price of filterless 25 bidi at Taka 25, filtered 20 bidi at Taka 20 and thus imposing specific supplementary duty of Taka 11.25 and Taka 9 respectively. Apart from this, they proposed for fixing the retail price of 10 gram Jorda at Taka 45 and thus imposing specific supplementary duty of Taka 27 as well as fixing the retail price of 10 gram Gul at Taka 25 and thus imposing supplementary duty of Taka 15.
We also proposed for banning production, import and marketing of e cigarettes, imposing 15 percent VAT on retail price of all tobacco products and keeping intact the existing 1 percent health development surcharge.