Overpriced cigarette sales lead to Tk3,784cr revenue evasion: Study
Anti-tobacco campaigners suggest implementing a licensing system for sales outlets
Cigarette companies in Bangladesh are evading an estimated Tk3,784 crore in revenue by selling cigarettes at prices higher than the Maximum Retail Price (MRP) printed on the packaging, according to a recent study.
The study, jointly conducted by the Bureau of Economic Research at the University of Dhaka and the Bangladesh Network for Tobacco Tax Policy, found that while MRP is strictly adhered to for most products in Bangladesh, cigarette companies have bypassed the regulation.
These findings were disclosed today (5 February) during a webinar titled "Unmasking Tobacco Industry Tactics: Strategies to Prevent Price Manipulation."
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In the fiscal year 2023-24, cigarettes were sold to customers at prices 8 to 21% higher than their printed MRP.
If it was possible to collect tax on the actual market prices, the revenue income of the government would have been around Tk3,784 crore in that fiscal year.
Retailers reportedly purchase cigarettes from company representatives at the MRP or above and subsequently sell them to consumers at even higher prices, according to the study.
The study also reveals key findings indicating significant price discrepancies in the tobacco market.
A 20-pack of premium cigarettes, MRP at Tk324, was sold at Tk345. High-tier cigarettes were sold at Tk253, surpassing the marked price of Tk240, while medium-tier cigarettes were sold at Tk153 instead of Tk140, and low-tier cigarettes at Tk115 instead of Tk100.
These price manipulations have led to an estimated revenue loss for the government, amounting to Tk587 crore from premium cigarettes, Tk155 crore from high-tier cigarettes, Tk632 crore from medium-tier cigarettes, and Tk2,410 crore from low-tier cigarettes.
The research, conducted across 48 retail outlets spanning divisional cities and district towns, confirmed that cigarette sales at inflated prices occur in every surveyed retail outlet.
During the webinar, Professor Dr Golam Mohiuddin Faruque, president of the Bangladesh Cancer Society, urged the government to take strong action against tobacco companies for violating the regulations and depriving the country of vital revenue.
Advocate Syed Mahbubul Alam Tahin, member of Bangladesh Network for Tobacco Tax Policy's Technical Committee advocated for a ban on the sale of individual cigarette sticks to curb tax evasion.
He also suggested implementing a licensing system for sales outlets to ensure accountability.
Rumana Haque, Professor of Department of Economics of University of Dhaka, highlighted the need for a robust national tobacco tax policy to enhance government revenue and protect public health.
