Three cigarette price tiers will hike revenue, reduce use, say ATMA, PROGGA

The Anti-Tobacco Media Alliance (ATMA) and PROGGA - Knowledge for Progress - have urged relevant stakeholders to reduce the number of cigarette price tiers from four to three in the upcoming national budget for fiscal year 2025-26.

At an event on Monday at the National Press Club in Dhaka, speakers said “the existing four-tiered price system in cigarettes prevents any tax and pricing measure from playing an effective role”.

Against this backdrop, the low and medium tiers of cigarettes should be merged and prices for the new tier should be hiked so that it can contribute additional revenue to government coffers and play a role in discouraging cigarette use among the youth and the poor demographic, they added.

PROGGA and ATMA also presented a number of proposals to be incorporated in the upcoming FY 2025-26 national budget.

In support of the proposals, Mahfuz Kabir, research director of the Bangladesh Institute of International and Strategic Studies (BIISS) and Member of the Local Government Reform Commission, said: "Currently more than 80 percent of all cigarette users belong to low and medium tiers. Merging these two tiers into one can hike the government's revenue inflow and reduce cigarette use.

“The additional revenue can significantly contribute to realising the government's ongoing reform projects."

Economic Reporters' Forum (ERF) President Daulat Akter Mala said, "The government should bring all tobacco products out of the purchasing capacity of people to protect public health."

As presented during the event, an analysis of the average retail prices of essential commodities in seven metropolitan cities [Dhaka, Chattogram, Rajshahi, Khulna, Sylhet, Barisal, and Rangpur] between Jul 4, 2021 and Jul 4, 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.

Among the tax and pricing measures presented during the event are as follows:

The low and medium tier should be merged into one and prices for 10 sticks of the merged tier should be set at Tk 90.

The retail price of high-tier cigarettes should be kept at existing Tk 140 for 10 sticks.

The prices for 10 sticks of premium cigarettes should be raised to Tk 190.

The supplementary duty on all cigarette tiers should be the existing 67 percent.

For non-filtered bidi, the retail price should be Tk 25 for 25 sticks.

In the case of filtered bidi, the retail price for 20 sticks should be set at Tk 20.

Both prices should be followed by a 45 percent supplementary duty.

Regarding smokeless tobacco, the retail price for 10 grams of Jarda and Gul should be Tk 55 and Tk 30, followed by 60 percent supplementary duty.

The budget proposals also suggest retaining 15 percent VAT on the retail prices of tobacco products and continuing the existing 1 percent health development surcharge (HDS).

In support of the proposals, speakers informed that budget proposals placed by anti-tobacco organisations, if realised, can help the government raise a staggering Tk 200 billion in additional revenue, which will come in handy in reaching revenue targets and improve public health. Implementation of such proposals, in the long run, will also help prevent the premature deaths of 1.7 million Bangladeshis, including nearly 900,000 youths.

The discussants in the event include Mortuza Haider Liton, convener of ATMA, Mizan Chowdhury, co-convenor of ATMA, ABM Zubair, executive director, PROGGA, and leaders of anti-tobacco organisations.

Nadira Kiron, co-convenor of ATMA, hosted the event whereas Hasan Shahriar, head of PROGGA’s Tobacco Control unit, presented the budget proposals.

It should be noted that tobacco claims 161,000 lives every year in Bangladesh.

In 2017-18, the toll of tobacco use in the national economy (due to medical expenses and loss of productivity) stood at Tk 305.6 billion.