‘Proposed tax structure will benefit tobacco companies but harm people, govt’

Proposals for pricing and taxing tobacco products in the announced budget for the fiscal year 2020-21 will benefit tobacco companies while the government will lose up to Tk11,000 crore in revenue and the public health will be in dire straits.

Eighteen anti-tobacco groups have made the claim in a joint media statement.

The finance minister had stated the goals of taxation on tobacco products were "to reduce the use of tobacco products and increase revenue" but the proposed budget would not achieve either of them but would backfire, reads the statement.

The statement says the proposal will not reduce the price level of cigarettes but will keep the prices of tobacco products the same as before or increase them nominally. Tobacco use will increase as people's purchasing power increases and prices rise much lower than inflation, posing an unprecedented threat to the country's public health situation.

The increase in tobacco use, especially in this Covid-19 situation, will create a dire situation in the public health system as smokers are 14 times more likely to be infected with Covid-19, according to health researchers, including the World Health Organisation.

The budget proposed to increase the price of 10 sticks of cigarettes by only Tk2, which would increase the price of each stick by only Tk0.2 or 5.4 percent while at the same time the per capita income of the people has increased by 11.6 percent.

Seventy-two percent of smokers are consumers of low-end cigarettes. This slight increase in price at the lower level and keeping the price unchanged at the middle level will further increase the smoking habit and encourage teenagers to smoke.

An increase in the price of high and premium level cigarettes by only Tk4 and Tk5 respectively will have the same effect.

The price of bidi per stick has increased by only Tk0.16. It is easy to imagine how much this increase will contribute to reducing tobacco use or increasing revenue. On the contrary, a company's profit will increase by Tk2.16 per 25-stick bidi packet.

Besides, the increase in the price of zarda is satisfactory, but the price of gul has increased slightly and no specific tax has been imposed on the product.

Overall, the finance minister announced a "tobacco company friendly budget," reads the statement.

If the prices and taxes of tobacco products were fixed as per the recommendations of anti-tobacco organisations, specific taxation and setting the price level of cigarettes to two instead of four, 20 lakhs of smokers would quit smoking and the number of smokeless tobacco users would be significantly reduced. It would save the lives of six lakh people in the long run and increase revenue by up to Tk11,000 crore.

On the other hand, like last year's, this year's proposal also has zero share of tobacco export duty to encourage tobacco export. This will increase tobacco cultivation, threaten the country's food security and prevent the country from tackling the food crisis in the aftermath of the novel coronavirus epidemic.

The country is going to face a terrible economic loss due to the epidemic, and the government needs additional revenue to cover this loss.

Despite the opportunity, the proposed budget has neglected the opportunity to raise prices and tax effectively to discourage excess revenue and the use of tobacco products. As a result, the goal of achieving a tobacco-free Bangladesh by 2040 promised by the prime minister will be hampered.

The statement was sent jointly by Aid Foundation, Arc Foundation, Bangladesh Cancer Society, Bangladesh Anti-Tobacco Alliance, BCCP, Bangladesh Network for Tobacco Tax Policy, Dhaka Ahsania Mission, Dhaka International University, Grambangla Development, Foundation, Pratasha Anti-Drug Organisation, Pragya, Campaign for Good Governance, Anti-Tobacco Women's Alliance (Tabinaz), Tobacco Control and Research Cell, WBB Trust and Ypsa.