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PROGGA’s Analysis on Proposed Tobacco Tax and Price Measures

 VB  Desk

VB Desk

Sat, 8 Jun 24

The proposed national budget for FY 2024-25, if adopted, will once again make tobacco products cheaper and more affordable. It will encourage the youth to use tobacco products, increase tobacco-related deaths and illness, and therefore spike the public health expenditure of the government. The proposed budget will cause the government to lose the chances of earning BDT 10,000 crore in additional revenues.

The proposed budget raises the retail prices of 10 sticks of low-tier cigarettes to BDT 50 from the existing BDT 45. This means that the hike per stick is only BDT 0.50 (11.11 percent). The supplementary duty has been raised by 2 percent, from existing 58 percent to 60 percent.

The prices of 10 sticks of medium and high- tier cigarettes are set at BDT 70 (from existing BDT 67, 4.48 percent hike) and BDT 120 (from existing BDT 113, 6.19 percent hike) respectively. The price of 10 sticks of premium-tier cigarettes has been raised to BDT 160 from existing BDT 150 (6.67 percent hike). The supplementary duty (SD) in all these tiers has been raised by 0.5 percent to 65.5 percent from existing 65 percent. On the other hand, the prices of 10 grams of jarda and gul have been raised by BDT 3 (6.67 percent) and BDT 2 (8.7 percent) respectively. The SD remains unchanged. In addition, the prices and SD of bidi have seen no change at all.

To put the changes of tobacco products’ prices into perspective, one may consider the increases in the prices of essential commodities in recent years. According to the Department of Agricultural Marketing (DAM), the prices of essential goods, such as sugar, flour, and potatoes, have seen a rise ranging from 40 to 90 percent. On the other hand, the increases in the prices of tobacco products in the proposed budget ranges from 4.48 percent to 11.11 percent only, with the prices of bidi remaining unchanged. This will make tobacco products cheaper compared to essential commodities and pose a threat to public health.

Simultaneously, since the hike in the prices of tobacco products is much lower than the rise in per capita income, it will make tobacco products more affordable. According to Bangladesh Bureau of Statistics (BBS), there has been around a 12 percent increase in the per capita income between FY 2022-23 and FY 2023-24.

It should be noted that, very recently, the 3rd report of Tobacconomics Cigarette Tax Scorecard has revealed a grim picture of the affordability of cigarettes in Bangladesh. Tobacconomics Cigarette Tax Scorecard is prepared based on four factors: cigarette price, change in cigarette affordability, tax share, and excise tax structure. Bangladesh scored 1.13 out of 5. The country's score in the previous report was 2.38. It is evident that the country score nearly halved in a matter of two years, owing to the nil country score in affordability factor. Tobacconomics team at the Bloomberg School of Public Health under Johns Hopkins University published the report based on data from 170 countries.

In his reaction to the proposed national budget, ABM Zubair, Executive director of PROGGA, said, 'The retail price as well as the SD imposed on the low-tier cigarettes, which holds 75 percent of cigarette market share, has seen a very negligible change. We demand that the government set the retail price at least BDT 60 and SD 63 percent so that it reduces the affordability of cigarettes, safeguards the youth, and increases the revenue of the government manifold.’

Notably, the prevalence of tobacco use among Bangladeshi adults is 35.3 percent and tobacco claims 161,000 lives a year in Bangladesh. The proposals of anti-tobacco activists, if realized, will prevent the premature deaths of 1.1 million people which also includes at least 5 lakh youth.

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