Specific tax on tobacco products needs to recover economic losses of corona

It is important to impose specific taxes on harmful tobacco products in order to protect public health and to recover the economic losses of corona. Therefore, it is time to introduce a specific tax structure for tobacco products. The speakers made the demand at a webinar titled ‘Necessary Imposition of Specific Taxes on Tobacco Products’ held on Sunday 10 May 2020.

The webinar was jointly organised by Bangladesh Anti-Tobacco Alliance (BATA), Bangladesh Network for Tobacco Tax Policy (BNTTP), Tobacco Control and Research Cell (TCRC) and Dhaka International University (DIU). The webinar is held via the meeting software Zoom.

MP from Gaibandha-1 constituency Shamim Haider Patwari presided over the webinar, while it was addressed, among others, by Rana Mohammad Sohel, MP, Md. Nurul Islam Talukder, MP Prof Dr Masuda M. Rashid Chowdhury, MP and Nazma Akhter, MP.

The MPs expressed their commitment to introduce a timely tobacco tax system and impose a specific tax on tobacco products. It was also attended by policy makers, tobacco control experts, tobacco control advocates and development workers.

Speakers at the webinar said that the imposition of a specific tax on tobacco products would encourage about 20 lakh adult smokers to quit smoking. The revenue from supplementary duty and VAT will be Tk 4,100 crore to Tk 9,800 crore more than expected in the current financial year. The rate is at least 14% higher than the current revenue from bidis and cigarettes.

In addition, due to the faulty tax system, the growing profit of the tobacco company can be controlled every year. They said a research paper published by the NBR called for a specific tax on tobacco products. As a result, there is no inconsistency or complication in specifying cigarettes.

The speakers also said that Bangladesh is one of the most tobacco-friendly countries in the world. If this situation continues, it will not be possible to achieve the goal announced by the Prime Minister to make the country tobacco free by 2040.

As a result, in the forthcoming budget, the desired goal will have to be achieved by eliminating the multi-level tax system on all types of tobacco products and by imposing specific taxes.

As the government will get additional revenue, the youth will also be kept away from tobacco products. In addition, a timely tobacco-tax policy needs to be formulated to introduce an acceptable tax system.

The speakers further said that what is shown that the tobacco company is paying huge amount of tax every year is actually the money collected by the VAT and supplementary tax payers. People pay this  money, not tobacco companies. What the tobacco company pays as income tax is only 3% of the total tax collected.

They said that in the last financial year, a total of Tk 22,630 crore was collected from the tobacco company, out of which only Tk 618 crore was income tax which was paid by the tobacco company. The remaining Tk 21,303 crore has been paid by the people.

Speakers at the webinar highlighted the revenue evasion of smokeless tobacco and said that the National Board of Revenue does not have the information of most of the companies producing Jorda, Gul and Sadapata. As a result, they are out of the tax net and the government is losing a huge amount of revenue.

Dhaka University Professor of Economics Rumana Haque read the main article and it was conducted by Syed Mahbubul Alam, Advocate, Technical Consultant of The Union at the time.

Nasiruddin Ahmed, former Chairman of the National Board of Revenue and Professor of the Institute of Governance and Development of BRAC University, also spoke in the webinar.  Khairul Alam Sheikh, Coordinator of National Tobacco Control Cell Saifuddin Ahmed, Coordinator of Bangladesh Anti-Tobacco Coalition, Dr. Syed Mahfuzul Haque of WHo and journalist Sushant Sinha were also present. More than 50 leaders of various anti-tobacco organizations took part in the webinar.