Cigarette Tax Structure Needs Overhauling: Reform can add BDT 20b extra to state coffer, encourage millions to quit

Business Report:

The existing four price tiers in cigarettes (low, medium, high and premium) has rendered tobacco price and tax measures less effective. Particularly, the very narrow price difference between low and medium tier cigarettes allows consumers to choose brands belonging to any of these two tiers.

To discourage the poor and the youth from lighting up and to hike the government’s revenue inflow, this glaring loophole can be plugged in the upcoming FY 2025-26 national budget by merging low and medium price tiers into one and reducing the number of price tiers to three.

Speakers said these at a journalists’ workshop titled “Tobacco Tax and Price Measures: Budget FY 2025-26” that took place at BIP Conference Room of the Capital on 12 and13 March 2025. The two workshops, organized jointly by PROGGA (Knowledge for Progress) and ATMA (Anti-Tobacco Media Alliance), was attended by 50 journalists from print, television and online media outlets.

The discussants in the workshop include Kawser Rahman, City Editor, the Daily Janakantha; Md. Sazzadur Rahman, Deputy Editor, The Business Standard; Mortuza Haider Liton, Convener, ATMA; Nadira Kiron and Mizan Chowdhury, both Co-convener, ATMA; ABM Zubair, Executive Director, PROGGA and Md. Hasan Shahriar, Head of Tobacco Control, PROGGA.

It was informed that tobacco products in Bangladesh are already cheap. For the lack of an effective tax structure, these products are getting much cheaper and affordable when compared to the prices of essential commodities. An analysis of the average retail prices of essential commodities in 07 metropolitan cities of the country (Dhaka, Chattogram, Rajshahi, Khulna, Sylhet, Barisal and Rangpur) between 04 July 2021 and 04 July 2023, as reported by the Department of Agricultural Marketing (DAM), shows that price of loose sugar has seen a 89 percent hike in this time period, the hike is 87 percent for potatoes, 75 percent for loose flour, 47 percent for pangash fish, 43 percent for eggs, 34 percent for soybean oil, 30 percent for powdered milk, and 27 percent for broiler chicken. However, during this same timeframe, the hike in the prices of different tiers of cigarettes ranged between 6 -15 percent only. This is pushing the youth and the poor into getting hooked on the addiction of a cheap toxic product.