Cigarettes to get costlier as budget raises taxes, duties

Prices of cigarettes are expected to go up once again after the government announced a hike in the advance tax on sales and an increase in the supplementary duty on imported cigarette paper.

The measures were outlined in the proposed national budget for FY26, presented by Finance Advisor Salehuddin Ahmed on Monday.

He said the advance tax collected from cigarette manufacturers on net sales value has been raised from 3 percent to 5 percent.

Salehuddin added that the supplementary duty on imported cigarette paper will be raised from 150 percent to 300 percent for commercial importers.

While these moves have been described as a "positive step" by some, tobacco control advocacy groups PROGGA: Knowledge for Progress and the Anti-Tobacco Media Alliance (ATMA) issued a joint statement, saying the proposed measures are still insufficient to significantly raise tobacco prices.

The proposed budget has left the retail price and tax rates of all types of cigarettes unchanged.

PROGGA and ATMA argue that as a result, the government will forgo up to Tk 200 billion in additional revenue and risk encouraging tobacco use among the youth.

In their joint statement, the two organisations noted that under the anti-tobacco proposal, the minimum retail price for low and mid-tier cigarettes, which dominate around 80 percent of the market, should be raised to Tk 90 per pack, alongside price increases for higher-end products. This reform would increase revenue and contribute to significant improvements in public health.

The groups also expressed disappointment that the price of bidis and their supplementary duty have remained unchanged for the sixth and tenth consecutive years, respectively.

They further pointed out that the prices and tax rates of zarda and gul, which are smoke-free chewing tobacco products, have also been left unchanged.

Over half of tobacco users in Bangladesh consume smokeless forms of tobacco, the majority of whom are poor and women. When inflation and rising per capita income are considered, these products become cheaper and more accessible, posing increased health risks, especially for low-income women.

Reacting to the proposed budget, PROGGA’s Executive Director ABM Zubair said: “Tobacco causes the death of 442 people every day in Bangladesh. If the anti-tobacco tax reform proposals were implemented, tobacco use and related deaths would decline, and government revenue would rise.”

Currently, 35.3 percent of adults in Bangladesh use tobacco. According to PROGGA and ATMA, if the anti-tobacco proposals are incorporated into the final budget, it could prevent the premature deaths of over 1.7 million people, including nearly 900,000 youths, while also boosting long-term revenue.