Cigarette makers want fair tax on all brands

Tax should be levied proportionately on all brands of cigarettes, not only on the low-end items consumed by the poor, manufacturers said.

The National Board of Revenue (NBR) has proposed the wholesale price for low-cost brands at Tk 1,100 per thousand pieces for the upcoming fiscal year from Tk 850 this year. The tax rate for these brands has been recommended at 52 percent, up from 47 percent now.

The prices and taxes for medium and high-end brands should remain unchanged, the tax administrator said.

The NBR also proposed the price of per thousand pieces of medium-end brands should remain unchanged at Tk 1,840 and the tax rate at 65 percent. It wants the tax rate for costly cigarettes at 72 percent in the upcoming fiscal year.

Cigarette taxes are a key source of revenue for the government. Out of the Tk 72,000 crore NBR revenue target for the outgoing year, the government will get at least Tk 6,000 crore or 8.33 percent from cigarette taxes.

“I am not against higher tax and price on cigarettes. But tax and price must be raised proportionately across all brands,” said Nasiruddin Biswas, chairman of Nasir Group of Industries.

Another businessman, requesting not to be named, said the tax hike move has been taken to give some specific companies edge over others.

There are hundreds of cigarette brands in Bangladesh. Of which, Gold Leaf, Benson & Hedges, Marlboro and Pall Mall are treated as high-end brands, while Capstan, Star and Navy medium brands.

Marise, Sheikh, Pilot and Top 10 are some of the low-cost brands that are increasingly dominating the cigarette market in recent years. Now these brands account for 52 percent of the cigarette market from 25 percent five years ago.

The manufacturers attributed the rapid growth of low-end brands to urbanisation and modernisation of society.

Bidi (traditional hand-made cigarette) smokers have been shifting to low-priced cigarettes because of changing consumption pattern, said the manufacturers.

Over the years, bidi production has been going down. Now only 400 crore pieces of bidi are produced against three times higher production just a decade ago, according to industry people. On the other hand, consumption of low-end brands has doubled to 600 crore pieces a year.

An NBR official said the poor spend more on tobacco than the rich. “We want to discourage them (the poor),” said the official.

According to experts, tobacco-related illness and death cost people thousands of crores of taka every year. Bidi and cigarette smokers die 6 to 10 years earlier than their non-smoking counterparts.

Global Adult Tobacco Survey Report 2010 shows around four crore adults use tobacco in Bangladesh, of them 58 percent male and 28.7 percent female. According to World Health Organisation, some 57,000 people die annually in Bangladesh for tobacco use