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The South Asian Times | সাউথ এশিয়ান টাইমস

Why tobacco tax reform urgent for Bangladesh

Timir Chachrabartee

Published: 16:31, 26 July 2022

Why tobacco tax reform urgent for Bangladesh

Regarding cigarette, retail price for each 10 sticks at low tier should be fixed at Tk. 50 and Tk. 32.50 as specific supplementary duty should be imposed; at medium level retail price needs to be fixed at Tk. 75 and specific supplementary duty at Tk. 48.75; at upper tier Tk. 78 specific supplementary duty by fixing retail price at Tk. 120; at premium level Tk. 97.50 specific supplementary duty by fixing Tk. 150 as retail price. As a result, the rate of specific supplementary duty at all price level would be 65% of final retail price.
VAT and 1% health development surcharge on retail price of cigarette will be in force.
Bidi: retail price of filterless 25 sticks should be fixed at Tk. 25 and Tk. 11.25 as specific supplementary duty; retail price of filtered 20 sticks be Tk. 20 and Tk. 9 specific supplementary duty be imposed. As a result, the rate of specific supplementary duty at the both levels would be 45% of final retail price. 
15% VAT on retail price of bidi and 1% health development surcharge should be in force.
Jarda and gul: retail price of each 10 gram jarda should be fixed at Tk. 45 and Tk. 27 as specific supplementary duty be imposed; retail price of each 10 gram gul be fixed at Tk. 25 and Tk.15 as specific supplementary duty be imposed. As a result, the rate of specific supplementary duty at the both levels would be 60% of final retail price. 
15% VAT on retail price of jarda and gul and 1% health development surcharge should be in force.
Focusing on the following actions will likely have the most impact in decreasing tobacco use prevalence in Bangladesh: 
Shifting from an ad valorem to a specific tax system that would be periodically adjusted for inflation and income growth to achieve health goals and predict revenue more effectively. Substantially increasing the tax and price of cigarettes in the lowest tier, which captures the bulk of the market with a market share sharply increasing from 25% in 2006-07, to 75% in 2020-21.
Substantially increasing the tax and price of bidis to reduce the gap with the cheapest cigarettes and to discourage switching between products. Improving the enforcement of tax policy on smokeless tobacco and exploring other non-tax measures that can amplify its impact, such as standardized packaging.
Other recommendations are: The existing division among tobacco products (filter/non-filter bidi, value level of cigarette, separate retail price of jarda and gul) should be withdrawn to simplify the process of imposing tax.
All the producers of smokeless tobacco products should be brought under tax regime. Gradually, all the tobacco products should be brought for marketing with packet/can in same quantity (number of stick and weight). 
It is needed to formulate and implement a simple and effective tobacco tax policy (for five year term), which will play a role in reducing the use of tobacco and increasing revenue.
Reinstatement of 25% export duty on tobacco products should be done.
Anti-tobacco organizations said, if the current cigarette tax system is reformed following the recommendations, which were placed ahead of FY 2022-2023, it would achieve the following:
It would reduce the prevalence of cigarette smoking from 15.1% to 14.0%; encourage nearly 1.3 million adults to refrain from smoking and deter more than 895,000 youth from smoking initiation; save the lives of more than 445,000 current adults and nearly 448,000 current youth from premature deaths in the long term; generate nearly BDT 396 billion in tax revenue adding about BDT 92 billion in additional tax revenues from the Supplementary Duty, Health Development Surcharge and VAT on top of the expected collection for FY 2021-2022, which is an increase by 30% of current tax revenue from cigarettes in the first year.
The achievement also includes increasing cigarette prices more at the LOW tier will help relatively lower income smokers who are more likely to smoke brands from the LOW tier to quit and at the same time limit the ability of smokers to substitute to cheaper brands when prices increase in the higher price tiers.
Achieving SDG's target of 3.4 - To reduce non-communicable disease deaths by one-third by 2030, this additional revenue can be spent.
Increasing the price of low-tier cigarettes could protect low-income cigarette users. About 21% of their income is spent on tobacco products. If this money is spent on education instead of tobacco products, it will be possible to increase the total cost of education for their children by 11%.
The tax recommendations, once implemented, would greatly advance the cause of economic development, and align tobacco tax policy in Bangladesh with global best practices.
Bangladesh has committed to achieving tobacco-related targets under the Global Action Plan for the prevention and control of non-communicable diseases and the SDGs. Raising taxes on tobacco is a cost-effective way to reach those targets. It is also a major step towards achieving the vision of a tobacco-free Bangladesh by 2040.
Tobacco tax reform will also generate significant additional revenue to help finance Bangladesh health and development priorities. This is a clear 'win-win' for the government and people of Bangladesh.
Iqbal Masud, Director of Health and Wash Sector of Dhaka Ahsania Mission, said the current tobacco tax structure is too complex that is a major obstacle to discouraging tobacco use. We have to simplify this tax structure. If the tobacco tax is increased in an appropriate manner, it will play an effective role in reducing tobacco use.
Dr. Habibe Millat, MP, Chairman of Bangladesh Parliamentary Forum for Health and Wellbeing, said to help tobacco users out of this horrible addiction, the world renowned method is to impose a high specific tax, which will eventually help us achieve a tobacco-free Bangladesh by 2040.
A study, published in the Tobacco Control (April 2021), shows that significant increases in cigarette prices at the lower segment would effectively reduce cigarette consumption among the people having low expenditure, improve health equity and enhance government revenue in Bangladesh.
Experts said, the government should now reconsider the proposals of reforming taxes on tobacco products in the national interest. Otherwise, the goal for tobacco free country would not be realised, inflicting the huge sufferings and the losses mentioned above. 
The writer is a senior sub-editor of vnewsbd.com, can be reached at timir1215@gmail.com
 

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