Uniform tax rate on tobacco products likely

The government may introduce a uniform tax rate on tobacco products irrespective of price range from the next fiscal year making the current basis – the higher the price, the larger the amount of tax paid – obsolete, officials said. The plan comes as the present system is said to have failed in reducing tobacco consumption and generating revenue from increased taxation as majority in the country are consumers of low-end cigarettes. As less tax is imposed on low-end cigarettes than on premium brands, experts believe that there has been no significant reduction in the number of smokers after the increase of tax. A uniform tax rate is, therefore, now under the plan since it is likely to serve the both ends – discouraging the tobacco consumption and generating new revenues. The National Board of Revenue has started examining the options to bring about a change after a directive from Finance Minister AMA Muhith. Muhith also asked NBR to seek recommendation from the Policy Research Institute on the matter. Officials said criticisms of the present system by the anti-tobacco campaigners and experts had played a significant role in making the government think of a more effective option. Anti-tobacco campaigners have long been urging the government to change the price-based tax system alleging that the system was not making any difference. PRI Executive Director Ahsan H Mansur said a uniform tax structure could only improve the situation as the current structure was in fact increasing the consumption of low-end cigarettes that are more harmful for health than the premium brands. “The tax on low-end cigarettes has not increased that much compared to other cigarettes, encouraging people choose low-end cigarettes over premium ones. This has further increased the health hazards while bringing not much additional revenue,” he said. Ahsan H Mansur said the tax on high-end cigarettes was now more than 5 times higher than low-end cigarettes. He said the gap could be reduced “easily if the uniform tax rate is adopted which can not only help increase revenue, but also reduce health risks. At present, a 48% supplementary duty is imposed on low-end cigarettes retailing at Tk18 per packet of 10, 60% on cigarettes retailing at Tk21-42 per packet of 10, 61% on cigarettes retailing at Tk44-69 per packet of 10 and 63% on cigarettes retailing at Tk70 and above per packer of 10. According to anti-tobacco campaigning organisation Progga, as many as 57,000 people die and 382,000 become disabled a year in Bangladesh because of tobacco consumption. The World Bank data says a sum of Tk11,000 crore is spent every year in Bangladesh on treating people suffering from tobacco-related diseases. Bangladesh has ratified Framework Convention on Tobacco Control, a global public health treaty from World Health Organization, in 2004.